We are in the late stages of a massive wealth-creation event. When it’s over, we likely won’t see another opportunity like it for decades.
If you invested in housing in the last few years, you’ve likely made incredible gains… whether you bought a house or invested in real estate stocks.
I hear this all the time…
“Steve, home sales fell hard in 2018. Houses aren’t as cheap as they were five years ago, either. Doesn’t that scare you?”
The concerns are understandable. But these ideas miss the bigger point.
Yes, home sales had a rough year last year. And yes, home prices have moved higher in recent years.
But when you look under the hood, the housing market is actually healthier than you think.
It’s still smart to bet on housing now.
Let me explain…
First, let me be very clear… I’m not calling for another decade of booming housing prices.
Today’s opportunity isn’t the generational one we saw back in 2011. But there are a couple reasons why we should expect housing to do well over the next couple of years.
The first is that housing is a better deal than a lot of folks believe. That’s normal after a decadelong boom. But thanks to the recent decline in mortgage rates, housing isn’t out of reach for most.
Just a few months ago, 30-year mortgage rates were nearing 5%. Now, these rates are down to 4%. Take a look…
Falling mortgage rates tell us it’s getting cheaper to take out a home loan. That’s great for folks who are looking to buy in today’s market – and it should continue to drive demand.
On top of that, supply in the housing market is still extremely low… Homebuilders can’t keep up with demand.
You can see this by looking at existing home supply. It’s based on how many months it takes to sell the entire supply of existing homes on the market, according to current sales rates. Check it out…
The housing market is extremely tight. The number of existing homes on the market is historically low today.
That creates an interesting scenario…
With mortgage rates falling, housing has recently become more affordable. That should increase demand, bringing new buyers into the market. But they’ll be coming into a market with incredibly low supply.
New demand with limited supply… That’s a recipe for higher prices.
This isn’t what the average person would expect, of course. But it’s the reality of what’s going on in the housing market right now.
U.S. housing is much healthier than most people believe. And I expect the boom to continue in the coming years.
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Source: Daily Wealth