Very interesting post at Google Finance yesterday, showing a simple yet deep manner in which to track the macro real estate market. Only two of these national homebuilders have presence in the Greater Charlottesville real estate market, Ryan Homes (NVR) and K Hovavian (HOV), while Toll (TOL) have been rumored to be poised to make a move in the near future. Will their appetites for development increase locally or pull back?
Everyone knows that business cycles oscillate from boom to bust every so many years, and real estate is not unique in this regard. Stock prices reflect these trends. Anyone who has looked at a home builder stock in the past couple years is intimately aware of this connection. But what does it mean to say that an industry, as opposed to a stock, is experiencing a downturn? It’s not just a matter of saying “real estate stocks are down” — it’s more that they’re down, in a roughly correlated manner, over a meaningful common time period.
Since 31 December, 2004:
What’s next? The cycle will continue, I expect. Making the correlation between this data and our local market is equally simple yet complex. While the stocks indicate to a certain degree where we’ve been and where we’re going, there are so many factors that affect the local real estate market that simply cannot be displayed on one of these graphs. More on this in next week’s post about the first year’s market stats.
We all know that what goes up must come down; will that which goes down come back up? I suspect so.
For an even more interesting graphical display, as well as a cogent analysis, this time one of the subprime market, check out Fortius One’s “Exploring a Slice of Subprime Space” post.