Right Now Is a Fantastic Moment to Own U.S. Houses
Wednesday, July 8, 2015 5:11
% of readers think this story is Fact. Add your two cents.
This is a crazy-perfect moment to own a home…
As I explained yesterday, I was never a real estate investor until the recent housing bust. But I’ve been buying ever since home prices crashed. And real estate is now the largest portion of my net worth, by far.
Today, I’ll show you why now is such a great time to own a home and invest in real estate… even years after the bust.
Let’s get started…
There are two main reasons why today is one of the best times in history to buy a home…
| 1. | House prices had their greatest bust since the Great Depression, and they’ve now recovered and are in an uptrend. |
| 2. | Mortgage rates are around 4%… which is near a record low. |
When you combine today’s prices with low mortgage rates, homes are still incredibly affordable.
In my office, we have a computer model of the “fair price” of the typical (median) home in America.
Our model has three inputs: the median house price, the current mortgage rate, and the median income.
The chart below shows our “fair value.” As you can see, when the bust happened – when prices fell and mortgage rates fell – U.S. houses became incredibly cheap relative to fair value. Take a look:
Today, home prices are still $52,000 away from fair value. They need to rise by 25% to get back to fair value (assuming the other two factors don’t change).
The move back to fair value is already underway. The good news is, house prices still have plenty of room to run higher, as you can see in the chart.
Think about this: Shelter is primal… and so is its price. House prices are driven by the most basic law in economics: supply and demand.
When supply of something is low and demand is high, prices go up. Higher prices eventually bring out more supply, and the market reaches “equilibrium.”
That’s the theory anyway… The reality is, housing is driven by greed and fear… Homebuilders don’t stop building once we’ve reached equilibrium. They keep building and building, until we reach the point where we have way too much supply and not enough demand. Then prices fall. That’s what happened when housing started to crash seven years ago.
Right now, there’s no supply, and there’s high demand. That means higher prices are coming.
This is not hard to understand. Housing is much easier to understand than some newfangled technology. It’s easy to see if the supply is low. One way is to look at how many new homes have been started. Take a look…
As you can easily see, we’ve underbuilt for eight years. At this point, basic economics is kicking in – there’s not enough housing supply to meet demand. This gives house prices an incredible tailwind today.
In U.S. homes, you own the asset. You own the dirt. And you’re buying the house and the dirt after a major crash. So the odds of their value falling from here are low.
The situation is just amazing. To sum it up:
| • | Houses are incredibly affordable right now. |
| • | House prices are still down from their highs eight years ago. |
| • | Mortgage rates are not far off of record lows. |
| • | After seven years of underbuilding, there’s no supply. |
The greatest portion of my net worth is in U.S. real estate right now. And I believe this is the best place to put new money to work today.
I urge you to do the same. Please don’t miss this once-in-a-lifetime opportunity.
Good investing,
Steve
Source: http://www.stansberryresearch.com/dailywealth/3045/right-now-is-a-fantastic-moment-to-own-u-s-houses
Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video).
MOST RECENT
HELP KEEP NEWS FREE
DONATE
HERE
| Online: | |
| Visits: | 1,603,319,790 |
| Stories: | 8,149,709 |
Wanted: Citizen Reporters,
Whistler Blowers, Insiders
Whistler Blowers, Insiders
"Not by might, nor by power, but by my spirit, saith the Lord of hosts." Zechariah 4:6
Today's Top Stories
Featured
Top Global
Top Alternative