3 measures that matter for a housing market's health
Lots of factors influence how well or poorly a local housing market will do, but The Wall Street Journal's David Crook argues that you can boil them down to three essentials. And no, it's not location, location, location.
First, jobs. Second, the price of homes vs. the cost to rent. Third, foreclosures.
Makes sense. If the local economy isn't growing, you won't have a growing number of people able to buy. If it's a lot more costly to buy than rent, tenants aren't going to be rushing to purchase -- not in these post-boom days, anyway. And a flood of bank-owned properties on the market makes it harder for regular homeowners to sell.
He offers a "yes, but" to his second rule-of-thumb: "Beware the outliers. Extremely low price-to-rent multiples can be warning flags for seriously depressed markets that are glutted with unsold properties."
Do you think these three factors are the most important measures for a housing market, or do you have others you prefer?