Everyone knows the housing market has been extremely hot, many calling it a bubble. But is it really, or are we actually in the early innings of the start of a massive appreciation of home prices much more than we've already seen?
First, housing pretty much only goes up looking at 20+ year time spans. I don't own a home (or any REITs), but housing is increasingly looking to me like the safest possible bet over the next decade. I was going to wait out the storm to buy, but now I'm questioning that logic. It's also (IMO) by far the safest way to be leveraged, especially for a first time homebuyer.
People bring up '08, but I think it actually strengthens the case if anything. If you bought "the average" home at the absolute worst time at the very peak... you'd be up around 50% today. And besides the appreciation in value you received the added benefit of living in the home, or collecting rental income if it's an investment property.
Then we have inflation. Whether transient or not, inflation is an absolute boon for debtholders. If you think the fed iswrong and inflation is going to be terrible, then buying the most expensive home you can reasonably afford seems like the best choice as inflation will eat away at the interest and maybe even some of the principal if it stays high enough long enough. Also the link above shows that over any 20+ year period, house prices have risen in actual value, adjusted for inflation.
The interest rates are still incredibly low and the Fed is going to slowly raise them, and a small amount. The current mortgage rates are basically unheard of in US history. This is like a once in a generation opportunity with rates this low.
Finally this seems like a straightforward supply and demand problem. The supply of desirable homes grows slowly, because (for example) in desirable locations like London/NYC/SF development is extremely slow or nonexistent due to housing and zoning laws. And the demand grows constantly, because the population size is increasing.
Am I looking at any of this wrong? How are home prices not going to spike even more hugely than before in the current environment?
tl;dr low interest rates are good for housing, high inflation is good for people with debt, buying even at the peak of the housing bubble in 08 means you are up hugely today, and the population grows faster, than houses in desirable locations can be built. All seem to point to an increase in home prices
Submitted June 22, 2021 at 12:27AM by oarabbus https://ift.tt/3zI0ssO
