A quick glance at the price of homes might make you think it’s 2008 all over again. But this housing market is a different animal.
Real estate is one of the best investments you will ever hold. And with the right approach, you can still come out ahead in an inflated market.
I’ve considered selling my home for a while now. How could I not when I see bidding wars hit $50,000 above asking price in my home market of Dallas?
But the problem arises on the other end of the deal. Navigating this wild housing market as a buyer is a tall task. That’s what I tackle in this week’s Investing With Charles.
Research analyst Matt Clark and I walk through the state of the U.S. housing market — plus steps you can take to assure you come out ahead.
Watch the video above for the whole discussion, or you can check out some of the highlights below.
At the start of our chat, Matt brought up a study he found on Financial Times. The Organization for Economic Cooperation and Development (OECD) tracks data across 40 of the richest nations in the world. Annual house price growth among those OECD nations hit 9.4% in the first quarter of 2021. It was the fastest pace for price growth in 30 years.
Matt digs into more of the data in the video above, but I want to focus on what’s happening in the U.S.
U.S. Housing Market Boils Down to One Word
I can explain some of the differences between the U.S. and the rest of the world with one word: stability.
The U.S. was never unstable during the pandemic, but a lot of the rest of the world was. I can say here in Peru — property prices are down about 30%. I’m in farm country right now, but when I go into the cities, I see for sale and for rent signs everywhere. It’s bad here.
People are afraid of political changes in Peru, but it comes down to stability. The U.S. has been stable throughout, and so it’s seen as a safe haven.
Couple that with these other factors, and you create a surge in home prices:
- Inventory is low. June data from the National Association of Realtors said that the inventory of houses for sale in the U.S. is down over 20% from this time last year. That’s massive.
- A lack of new home construction. The pace of new home construction wasn’t keeping up with demand before the pandemic. Throw in pandemic closures, and you have a real shortage of stock.
- Renters have wanted a house for a while, especially after the last year.
- Millennials are getting married and starting families.
It was the recipe for an explosion in home prices.
Now that brings the question: Should you participate in this housing boom?
Free Money & Markets Gear!
Everyone loves free swag! Do you want to represent Money & Markets at your next barbecue or big family gathering?
Here’s your chance to do just that! We tailor our content to what interests you. That’s why we feature your questions in our videos, including Investing With Charles, Ask Adam Anything and the Marijuana Market Update.
Just send your question to email@example.com, and if we plan to use it in one of our segments, we’ll send you a free Money & Markets hat! (Sorry, but this is limited to our U.S. audience only at the moment.)
Stumped on what to ask? Questions we’ve featured in the past include:
- Is there more downside for Bitcoin and Ethereum, or is now the time to buy?
- Can you do a full analysis and give us your thoughts on Slang Worldwide (SLGWF) cannabis company?
Where to Find Us
Coming up this week, Matt will have more on The Bull & The Bear podcast, so stay tuned.
Don’t forget to check out our Ask Adam Anything video series, where chief investment strategist Adam O’Dell answers your questions.
You can also catch Matt every week on his Marijuana Market Update. If you are into cannabis investing, you don’t want to miss Matt’s weekly insights.
Remember, you can email my team and me at firstname.lastname@example.org — or leave a comment on YouTube. We love to hear from you! We may even feature your question or comment in a future edition of Investing With Charles.
To safe profits,
Co-Editor, Green Zone Fortunes
Charles Sizemore is the co-editor of Green Zone Fortunes and specializes in income and retirement topics. He is also a frequent guest on CNBC, Bloomberg and Fox Business.