Now is the time to buy a house in the U.S.
It’s not because of what’s specifically going on in the housing market. It’s not because of supply and demand or some good data point that could drive prices higher.
Believe me, there are still plenty of reasons to be bullish on housing, as I’ve recently explained
here,
here, and
here. But that’s not why you should consider buying TODAY.
It’s time to buy a house right now because home prices suffer from extreme seasonality. And January is the absolute best time to put your money to work.
Let me explain…
“Seasonality” simply means that an asset’s price tends to peak and bottom at certain times of the year. Many assets are seasonal… But few assets move in seasonal trends as consistently as U.S. housing.
Home prices tend to bottom (for the year) in January. And they tend to peak (for the year, again) in June. This happens year after year, like clockwork.
The chart below shows average single-family-home prices since the housing bust. The pattern is consistent and obvious. Take a look…
The lows always occur in the winter months (January), and the highs always occur in the summer months (June).
And this isn’t a post-crash phenomenon. Housing prices have followed this pattern for decades, as the chart below shows. Look at the consistent “up-and-down” price movement from year to year. It’s incredible…
What’s crazy is how extreme the swings in housing prices are from their yearly bottom to their yearly peak… In short, home prices typically make all of their gains from their January bottoms through their June peaks.
The table below shows what I mean…
|
Periods Back to 1989
|
Average Return
|
|
Normal 12 Months
|
3.0%
|
|
June to January
|
-3.7%
|
|
January to June
|
9.0%
|
Home prices have only increased 3% a year since 1989. And all of the gains happened from January to June… In that period, home prices tend to rise 9%, on average. Wow!
Over the rest of the year – from June to January – home prices tend to lose value.
If you’ve been wondering when to finally take that step and buy a new house, you’ve got your answer… Right now!
January is the best time of the year to buy a home. It’s the seasonal bottom for home prices in the U.S. And the biggest gains for 2016 will likely occur over the next five months.
If you’re thinking about buying, do it now!
Good investing,
Steve
Source:
http://www.stansberryresearch.com/dailywealth/3187/right-now-is-the-time-to-buy-a-house
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