I
know what you're thinking... "The housing market has already
been booming for a while now. How much longer can it go on?"
A
lot longer.
The
reason is simple: There's no supply of houses. (It's hard to
believe... but it's true.)
With
no supply, and a ton of demand, home prices can only go one way –
up.
Let
me show you how much supply is lagging even after a few years of this
boom.
Total
housing inventory has fallen year-over-year for 24 straight months,
according to the National Association of Realtors.
Let's
take a closer look at this idea and what it means for us today...
Here's
a chart of the housing inventory – existing homes that are
currently available for sale in the U.S.
As
you can see, inventory hit a record low recently. Take a look...
I
want you to notice something else on this chart... Inventory hit a
record high in 2007 – at the peak in house prices ... and just
before the you-know-what hit the fan.
The
last time housing inventory was at a level similar to today's was in
2001. Back then, you wanted to be a BUYER of real estate, not a
seller.
In
short, you want to bet on house prices going higher when there's no
inventory... And you want to bet on house prices going lower when
inventory is at record highs.
Now
let's quickly look at another number: new homes being built...
You'd
think homebuilders would be taking advantage of the lack of
inventory. You'd think they'd be building a ton of homes. But that's
not quite what's happening yet...
After
the big housing bust, builders stopped building homes. It has been
nearly a decade, and the rate of building is still "below
trend." Take a look...
Housing
starts have increased dramatically from the bottom... But they're
still below average. Building hasn't caught up with demand yet. And
that has kept supply low.
Today,
we have a small number of homes being built, and a record low
inventory of homes for sale.
Based
on that, I believe home prices will continue to rise.
Could
something unforeseen happen that blows-up my thesis? Of course!
The
brilliant Nassim Nicholas Taleb wrote a book titled, "The Black
Swan: The Impact of the Highly Improbable" where
he talks about just that, an unforeseen event (think 9/11) that
completely disrupts the current world environment.
But
there's no way anyone can really anticipate something like that with
any degree of accuracy so ... as a (hopefully) rational human being,
I'm putting my money on HISTORY and TRENDS based on HARD DATA.
And
so ... I believe home prices will continue to rise.
Give
me a call if I can help you in any way.
On
Your Team,
Ken
951-760-3833
KenAHall@gmail.com
BRE
01418440
