Home prices are jumping and just registered the largest
increase in seven years. Warren Buffet is reportedly buying real
estate, having touted it earlier this year, and
is calling real estate "a beacon of relative strength in an
otherwise weak economy." It outlines the best way to play a real
estate recovery, from home building stocks to REITs to owning
This sounds great, just the shot in the arm this crummy
economy needs. But before you throw your savings into KB Home (
) and Lennar (
), this may not be as good as the headlines imply.
It's possible this price jump is a spurt produced by kinks in
the real estate hose. Because prices are low, people are renting
out their places instead of selling them -- helped because all
those people who have been forced into renting are driving up
rental prices. If prices rise a tad, today's landlords may change
course and dump their homes on the market. Meanwhile three
million properties still haven't even hit foreclosure.
And unemployment, while falling, is still high. That makes it
hard or nerve-wracking for many to buy.
US Unemployment Rate
Investors love to call an end of the housing rout, as YCharts'
Dee Gill discussed
. But some have been burned before by the ups and downs of Pulte
), D.R. Horton (
), Ryland (
), Lennar and Toll Brothers (
The most recent housing numbers may, in retrospect, look
prescient. But they may just as easily end up looking somewhere
between misleading and meaningless.
From the editors of YCharts.
YCharts Pro Investor Service