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May Housing Starts And Self Directed IRA Considerations

Housing Starts are a key economic indicator as to how well the housing market is performing. It is a indicator of building an the level of building in relation to consumer demand for homes.

The May 2012 Housing Starts numbers remain 69% below the 2006 peak. The housing numbers clearly show that home starts, and sales are bouncing around some bottom. The overall changes from April to May are somewhat statistically insignificant in terms of tell us which direction housing might be headed. the overall change year to year in May 2012 is significant and shows a 28.5% increase, but again that is at the lowest level of activity since housing numbers started being tracking in 1945.

The last 42 months of housing activity really paints a picture of stagnation and not much in the way of forward progress.

Hosuing Starts

When you look at these numbers since 1945, its very clear that we have arrived in uncharted territory. Most likely, 1930s era territory or maybe worse.

However, the one bright spot about these numbers may be that we may actually be at the bottom. This may also mean that we are at the lowest prices for homes that we are going to see. This then begs the question of whether or not you should consider purchasing investment property with your self directed IRA.

We realize that most people are very apprehensive and concerned about what is happening in the economy and the world in general. But remember this basic truth – everyone has to have a place to live in. We’ve shown that renters are increasing. That apartment rental/absorption rates are at all time highs. We recognize that if you purchase a property with your self directed IRA that you may see little to no significant price appreciation for some time. However, with the low prices and distressed sellers, its much easier to find properties that will cash flow. Its not unreasonable to find 6-10% rates of return.

Given that we still see an economic winter brewing on the horizon, and that you are not likely to be able to earn reasonable returns with reasonable safety for the near term, real estate may actually be a very good choice. We firmly believe that if the economic future looks as stark as we have been saying, then hard assets such as metals and real estate are the only things of true value. Therefore, it only makes sense to start evaluating investment properties in your self directed IRA.


The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.