Janet Yellen showed her cards…
In a speech, the Federal Reserve Chair said:
Although we work through the financial markets, our goal is to help Main Street, not Wall Street. By keeping interest rates low, we are trying to make homes more affordable and revive the housing market…
That is a direct quote. And it’s not the only time the Federal Reserve has talked about propping up the housing market.
[ad#Google Adsense 336×280-IA]My friend, we are being dealt a once-in-a-few-generations opportunity here…
Houses in much of America are incredibly affordable right now, thanks to near-record-low mortgage rates.
Meanwhile, the Federal Reserve is “trying to make homes more affordable and revive the housing market.”
To me, this is a one-way bet…
The bottom was hit.
And even though prices are up, I believe you are not going to see today’s prices ever again.
One simple reason is there is nothing out there to buy. Homebuilders haven’t been building homes.
The thing is, people keep having babies… And those families need roofs over their heads. But those roofs aren’t being built – at least not yet. Take a look:
The chart isn’t complicated…
The black line is the number of houses about to be built. The grey bars show recessions. Every time the economy went into recession, builders stopped building homes.
The important part is, builders eventually started building again after recession. Babies kept being born and families kept needing houses.
Over time, we always got back to the trend line. Looking at this chart, it’s not much of a stretch to imagine housing starts going back up to their trend line of around 1.5 million homes built a year.
I am incredibly optimistic about the housing market (particularly where I live in the Southeastern U.S.).
I don’t even think it’s a bold prediction to say that house prices will continue to go up. It’s just basic economics.
Looking forward, we need more housing starts. The chart tells the story. Until housing starts go up, I expect we’ll see higher and higher home prices in the U.S.
I personally have been buying real estate… Yes, prices have moved up. But I don’t think it’s too late, at all.
I suggest you consider doing the same, if you haven’t already…