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Housing Hasn't Reached Tipping Point, But Could Soon

05.27.08

A Realtors’ group said Friday that April sales by homeowners declined by 1%, while inventory jumped 10% and home prices tumbled another 8%. This is just another chapter in the mess that is housing right now in America.

But what do all these gloomy numbers really mean week after week? Well, it shows we haven’t reached the tipping point yet. As long as inventory continues to grow (thanks to foreclosures of course, not from silly developers who haven’t cut back on construction) and cautious banks being more selective with borrowers (seeing as their previous lack of discretion started this mess), prices will continue to free-fall.

But don’t think this will last forever. It’s becoming more and more of a buyer’s market by the day, but sooner or later prices will bottom out and inventory will peak. After that, you’ll see more and more buyers emerge and the number of available homes decline. Then, prices will level off and the housing sector will be on the road to recovery.

Obviously, those who said the worst of the housing market’s troubles were disappointed by the April numbers. While I admit we’re not out of the woods, the economy is starting to turn a corner and I think things will start to look up soon.

A smart investor doesn’t react to current conditions, but anticipates the future. In previous months, I loaded up my Blue Chip Growth and Emerging Growth portfolios with stocks that would benefit from the ballooning cost of energy and food, and right now subscribers are reaping rewards. Agricultural supplier Terra Industries (TRA), one of my Top 10 Emerging Growth stocks for June, has grown in value over 60% in less than a year. And fertilizer giant Potash Corporation (POT), one of my Top 5 Blue Chip Growth stocks for June, has handed us a 200% return in about the same period!

When the housing market does reach a tipping point, those who see the trend coming can align their investments accordingly. Will you be ahead of the curve? Join Blue Chip Growth or Emerging Growth today to make sure you get in on the ground floor with tomorrow’s market leaders!

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