Further Evidence That The Housing Market Is Turning The Corner

Back in February Warren Buffet commented that he would buy up a couple of hundred thousand single family homes if it was practical because he thought they were such an attractive investment. I point this out not because I believe you should believe everything that comes out of Warren Buffet’s mouth but because it makes a good opening line to this blog post. The guy certainly gets it wrong quite often but in general he’s been a pretty successful investor.
But there is actually more concrete evidence out there these days that the Chicago and national housing markets may be turning the corner – cold hard data. First there is the employment data for the Chicago metro area. I just pulled the numbers for June and they show a significant increase. See the graph below.
Chicago employment
216,000 jobs have been restored since the bottom in January 2010. Forget what you may have heard in the media about the unemployment rate going up – that just reflects a substantial increase in the estimated labor force. What matters to the housing market is that more people are employed so more people are able to buy and rent homes.
Then there is the SPDR S&P Homebuilder’s Index ETF, which owns the stocks of homebuilders and other companies in businesses related to homebuilding. Like any stock or mutual fund the value of this fund will reflect the outlook for these companies, which will reflect the outlook for the housing market. Check out the 5 year graph below and you can see that this index is approaching a 5 year high. In other words, the outlook for the housing market is apparently the best it’s been in 5 years.
Homebuilders index

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