U.S. Economy on Mend

The U.S. economy is on the mend and housing is poised for a rebound, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York.

“The momentum in the economy is moving forward,” LaVorgna said today in an interview on Bloomberg Radio.

Housing is close to a turnaround because “we have had a tremendous improvement on inventories,” he said. “We are much closer to a housing bottom than many believe.”

Is he right? It seem these days one can find a surplus of media voices with any of a number of conflicting points of view. We all want to be optimists, though.

What factors go into an improving housing market? Traditionally this includes inventory, interest rates and the unemployment rate. Nowadays we need to also add in the effect of government re-regulation (tax credits, mortgage underwriting standards, arms-length appraisals, etc.) to the mix.

Most of these factors apply across the USA, but your local inventory probably means the most. Let’s be glad we don’t live in Las Vegas, Arizona, Florida or parts of California where massive overbuilding and subsequent foreclosures have cut their price by 50 to 60% since 2006. Ouch.

What does that mean in central New Jersey and specifically our market area here in the Somerset Hills? Come back soon for an analysis of local market inventory at different price bands and the number of recent closed sales during the periods measured.