Wall Street Journal reported that evidence mounts for strong recovery. The following is quoted from Wall Street Journal.

“There’s a growing risk that we’re underestimating the strength of the recovery,” said Stephen Stanley, chief economist at Pierpont Securities, noting that deep recessions tend to be followed by steeper recoveries. “If the economy pops, it’s going to be faster than anyone is forecasting.”

That’s pretty encouraging! The job market is still dull, but many companies can’t find qualified people to fill positions. If the recovery is really on the way, all prospective home buyers, especially in San Francisco bay area, will need to wait for long time before their dream of owning homes. Home prices are already creeping up and out of reach for many buyers. If the low interest rates are here to stay despite of strong recovery, we may witness another real estate bubble.

Yes the real estate market appears to be making a bottom. The numbers that have come out over the last few months point to a real estate market that is extremely weak, but seems to be coming off the bottom ever so slightly. In recent weeks analysts on Wall Street and talking heads on financial television networks have been speaking extremely highly of the real estate market. I think it is a good idea for investors to understand that the real estate market isn’t getting worse anymore, but I also think they should be very careful about diving back into a market that still has a huge amount of supply.

Overall I believe that investors should learn a major lesson from the real estate market bubble that burst in the last few years; your house should be a place for you to live and not counted on as an asset or an investment that will grow by leaps and bounds. Yes your home will probably increase in value over time, but you are better off thinking of that as a bonus than you are counting on this for your future needs. Unlike other assets the market for a home is not always extremely liquid, as we have seen in the last few years.

The demand for houses is likely to improve over the next few months, but do remember that there is a huge amount of supply on the market that has been there for quite some time. In addition, there are many sellers that have decided not to sell their home during the recent downturn who may come out of the woodwork and want to sell their home as housing demand improves.

The bottom line is that the real estate market is showing signs of life, but it is far from being a boom area that investors should jump into right away.