Green Shoots -- Housing Market Version

More Demand Coming Off the Sidelines?

I wouldn't say its a trend, at least not yet, but at my Sunday open house I encountered an encouraging sign for the housing market: a couple in their late '50's - early '60's, now renters, contemplating buying my client's (very nice) townhome.

Their credit was (more than) fine, they both had jobs, and they weren't particularly rattled about the economy.

Having rented for the last 3 years, they had no particular beef with their landlord -- at least beyond the usual, garden variety inattention. But their rent was going up for the second time in three years, and their location was noisy and crowded rather than private and residential.

Too, the now-renters wanted to plant flowers and a garden.

Even if their rented townhome had the space, it wouldn't feel the same.

Just as no one washes a rental car, few renters put a lot of TLC into improving their rentals.

vs. 2006

Contrast the aforementioned, ultra-conservative profile with what Realtors were seeing just three years ago: waves of renters, many with dubious (or no) credit, wanting in on the housing boom.

In the stock market, it's a strong bullish indicator when people are defensive, and there's a lot of cash on the sidelines.

At least in theory, the pool of cash represents buying fuel for another upswing.

Similarly, a large pool of former owners-now renters bodes well for future housing demand.