Economy

You may notice that we don’t run certain types of stories very often here. For example, "Experts predict…" pieces. Why not? Because expert predictions about economic matters are nonsense.

We’ve been saying for a long time how important the housing industry is to the economy — how every home sold has a major and positive effect on industries far and wide.

Well here’s a great chart that makes that point crystal clear. It shows housing starts vs. the unemployment rate.

Unemployment began to skyrocket around January 2007, peaking about two and a half years later. Since mid-January 2009, though, it’s been going down.

Meanwhile, one-unit housing starts peaked around January 2006, plummeted for about three years, and only started rising again in early 2009 with the rest of the economy.

The first quarter 2013 Virginia Home Sales Report has been released and year-over-year state wide indicators show that the housing market in Virginia continues to experience steady improvement.

Real estate investors have helped the market recover. But for the long-term health of the market, maybe they should stop now.

(To be clear: By “investors” I mean people and companies that buy single-family homes to turn them into rentals, not house-flippers.)

Here’s what’s worth watching: When all those foreclosures went on the market at deep discounts, investors began snapping them up. That was a good thing, because there was so much inventory out there that prices were staying low.

Once most of that distressed inventory was gone, though, conventional wisdom said that investors would ease off. Prices would go up and the great deals would be gone.