Homes Vs. Stocks

Housing continues to give the stock market a run for its money.

In the past five years, while the stock market has been relatively flat with the Dow Jones Industrial Average stuck around 10,000, home prices have boomed an average of nearly 42 percent nationwide, according to the first quarter 2004 report from the Office of Federal Housing Enterprise Oversight (OFHEO). What's more, home price appreciation nationwide is up 7.7 percent in the year ending the first quarter 2004 -- more than twice the rate of inflation. Freddie Mac's quarterly Conventional Mortgage Home Price Index put even more stock in the housing market, saying values are up 8.5 percent.

Also, OFHEO said, home price appreciation in 11 states was up by double digits and the large Western region enjoyed a greater than 12 percent rate of home price appreciation over the year.

New York Bank: Housing Bubble? Fugedaboudit.

If you are balking at buying a home because of all the bubble talk, don't, says the Federal Reserve Bank of New York.

Economists Jonathan McCarthy and Richard W. Peach maintain that the strength, not weakness, of market fundamentals is responsible for the run-up in housing prices nationally.

Increases in family income and low mortgage rates have kept homes affordable. Home buyers look not at growing home prices but month-to-month affordability when they budget a home purchase.

Two other studies -- Harvard Joint Center For Housing Studies' "2004 State of the Nation's Housing Report" and Homeownership Alliance's "Home Sweet Loan" -- both say the housing market is positioned for 10 more years of growth.

May Homes Sales Exceed Expectations

New-home sales surged to a record high in May, rising 14.8 percent to a record seasonally adjusted annualized rate of 1.37 million -- the largest gain in home sales since April 1993, the U.S. Commerce Department reported.

Economists were expecting a sales rate of only about 1.12 million in May. Economic experts say gains in employment and income, buyers keeping one step ahead of rising interest rates and real estate's investment potential fueled the buying surge.

Economy-boosting factors were more evident in the Northeast where sales rose a whopping 53.2 percent and in the South where sales rose 20.3 percent, the Commerce Department reported.

Let's Get This Home Party Started

You know the names -- Avon Tupperware, Pampered Chef, Mary Kay -- and some not so familiar -- Tomboy Tools, Arbonne Skin Care, Discovery Toys.

These products are all sold in a nearly recession-proof growth industry, which is not unlike the industry's "retail outlet" -- the home.

The home party business is an $8 billion chunk of the larger $30 billion-a-year direct selling industry which is enjoying growth of about $1 billion in sales a year (even through the last recession, again just like housing). One million new salespeople join the ranks annually.

The comfort of one's own home is a natural place to pitch products used in the home, salespeople say. Home parties also offer social and employment opportunities, the host gets free stuff and is encouraged to tidy up before guests arrive.

The Direct Selling Association says industry growth today is largely due to men -- downsized, outsourced, and otherwise pinkslipped -- entering a field dominated by women who are largely married, independent contractors, with at least some college education and aged 35-54.

No this isn't a swingers' meet market. Making extra cash is the number one reason why a home party isn't just another "house" party.