Let’s commence the discussion today on axioms. An axiom is defined as that which is evident. Axioms are also an anchor or starting point on which to logically build.
I had a land economics professor at Texas A&M (Dr. Ivan Schemedemann) whose primary axiom was that, if you made more money, you were simply broke at a higher level. There’s a lot of truth there. Ditto my Dad, a sheep rancher in the Texas Hill Country. His primary axiom is that if you own a four-wheel drive pickup you will get stuck 400 yards further from the road than if you owned a two-wheel drive pickup. We unfortunately proved that one more than once. Think deep snow, mud…..
I personally have axioms relating to real estate and economics. The first is that jobs are everything. Period. There are only three types of people that purchase homes without a job. They have grey hair, blue hair or no hair—they are retirees. Almost everyone else needs a job to buy a house. My second axiom is that wherever the numbers of sales of homes goes, property values will generally follow in the next 12 to 24 months. We are seeing that today as prices are rising, just as we saw home values decline after existing home sales peaked in 2005 while home prices peaked in 2006. Another axiom I invoke frequently is the TINSTAANREM clause — There Is No Such Thing As A National Real Estate Market. Each real estate market is different. Ditto the economy.
The last two axioms are clearly seen in an analysis just reported by 24/7 Wall Street. This analysis was based on data provided by Zillow and Fiserv, among others. The markets are ranked by the greatest increase in home values from Q1 2012 to Q1 2013. Not every market in the country is included in this study. Several states, such as Texas, do not have mechanisms for sales price disclosure, and in some markets Zillow may not have been able to license such data.
Keep in mind also that In many circumstances the respective buyers are investors rather than homeowners.
That said, the table shows the markets with the largest price increase from Q1 2012 to Q1 2013 along with Zillow’s forecast of house values in the next 12 months.
To read the complete article, including added information on each of the markets and a more extensive discussion of methodology, click here.
Both the sales volume as an indicator of future prices and the TINSTAANREM clause axioms are once again verified.
The best news, however, is that consumer and investor confidence has returned, and that is reflected in increasing number of transactions, rising home values and shrinking foreclosures and defaults.