If you’d like to see some hard numbers to demonstrate the revitalization of the U.S. real estate market, you’re in the right place.

The Philadelphia Stock Exchange manages a stock index called the Housing Index (symbol HGX).  The housing index is calculated based on the market value of 20 of the largest home builders across the United States.

To be certain, this index tracks the value of home building companies rather than real estate values.  However, a reasonable observer can not deny that a primary driver of the value of home building companies is the health of the underlying real estate market.  So in many ways, the HGX index can reasonably be viewed as a proxy for the underlying real estate market.

The Housing Index hit a low value of 96.50 back in July of 2008 – right when the negative news was at its height about the U.S. real estate market.  Since then, the negative news has continued, with the “fall” of Fannie Mae and Freddie Mac along with regulatory intervention by the FDIC into many banks and lenders.

But ever so quietly, the Housing Index has been on the move – and by a very significant margin.  Since it’s low value of 96.50 back on July 11, the HGX has gone all the way to its current value of 133.98 – an increase of 38.8% in under two months.

Consider these interesting facts:

  • The stock market tends to be a “leading indicator” – this means that the action of the stock market (or pieces of it) tend to predict what will happen in the broader economy.  If the Housing Index is a leading indicator, much better times are headed towards home builders and by extension the U.S. Real Estate Market
  • The primary index used to judge the value of U.S. real estate is the Case-Shiller Index.  It is a “lagging indicator”, which means that it is based on data from the past rather than expectations for the future.  The Case-Shiller index has shown month-over-month improvements for most of the 20 major real estate markets they track during the past couple of months, along with a significant leveling of the national real estate decline.  If the Case-Shiller index is a lagging indicator, then real estate values are already more firm and better than anyone yet realizes.

There’s a lot to be happy about if you’re an active real estate investor.  You just have to read between the lines to get to the real heart of the matter!

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