Taking an up close and personal look at residential real estate market
Monday, August 05, 2013 1:52 PM
Metrostudy, a consulting firm based in Houston, analyzes the health of the residential real estate market in metropolitan areas across the U.S. and issued prescient warnings about the housing bust as early as 2004. One of its main analytical tools, drive-bys, is what makes Metrostudy interesting, according to Bloomberg Businessweek.
Metrostudy employees drive through newly built or still being built home developments and start observing. Are there toys on a house's lawn? Good sign: A family has moved in. Families mean stability. Is there a garden hose attached to the side of the house? Another good sign. The house is not only occupied; it has an owner who cares about his or her property. A welcome mat is always, well, welcome.
A bad sign: no curtains in the windows. That means the house could be unoccupied -- and unsold. Two other observations that trigger alarms are a high number of empty lots and newly completed but clearly empty houses, both indicators that a developer may have badly overestimated demand and could soon be choking on inventory.
Analyzing all this data streaming in from Boston to Miami is Brad Hunter, chief economist of Metrostudy. He was one of the first to observe signs of life in the residential market in 2009, saying home sales would show staying power even after the end of President Obama's tax break on residential sales.
Now, Hunter is forecasting double-digit increases in new home prices for the rest of the year. Read more.