The Housing Boom Is Already Gigantic. How Long Can It Last?

This article is going viral The Housing Boom Is Already Gigantic. How Long Can It Last?

The viralness is due to the article combining two of the three elements of the wealth-intellectualism-individualism trinity, those being intellectualism (generally, high-IQ people, who have more money and thus are more likely to be homeowners, are interested in home prices whereas the less intelligent don’t care as much, and also Silicon Valley, which has a lot of high-IQ people, has seen home prices surge in recent years) and wealth (homes are a major store of wealth).

So yet again I was right having in 2014-2015 correctly predicted that home prices would keep rising, and they have. The people predicting bubble and crisis were wrong again as usual. Same for James Altucher, who says to never buy a home, was wrong as he usually is, just as his “Crypto Report” which he promoted at the peak of the Bitcoin bubble in late 2017 and early 2018 was a disaster [the timing could not have been worse and Bitcoin has since lost 80% of its value]. I discus why James is wrong about home ownership here. Also, since 2009, rent has exceeded CPI inflation by 2-3% a year, which makes buying even more worthwhile.

From the post Robert Shiller…Wrong About Real Estate:

How about renting? Home ownership is about creating wealth for yourself instead of making the landlord rich. There are many millennials who are living with their parents instead of pissing away money every month for rent, and then using the saved money from their job to buy a home, achieving financial independence. With renting, you’re never are able to achieve independence, since you’re constantly draining money, and the rate of rent, especially since 2011, for most locations has far, far exceeded inflation. Over the long run (>5 years), the data suggests buying is better than renting

So why do home prices keep rising?

-Scarcity. The 2006-2010 housing crisis severely disrupted the supply of new homes, so when the economy recovered, home building did not, hence prices shot back up.

-Tons of Chinese money flowing into high-IQ, smart regions such as Vancouver, Silicon Valley, Seattle, New York, Southern California, etc. As much as the left insists America is bad, the rich Chinese are ignoring the left and love America and cannot get enough of its expensive real estate and elite schools. But this may have the consequence of making housing less affordable, but more demand means more construction and it boosts local economies having foreign money flow in.

-Low interest rates. This makes riskier assets such as stocks and real estate more attractive relative to cash, and it makes mortgages cheaper.

-The U.S. economy is strong. Unemployment is low, exports high, tons of innovation. All of this trickles to the housing market too.

My prediction is home prices will keep rising for the foreseeable future. For all the hype of the 2006-2008 housing crash, which is still fresh in people’s memories, such collapses are rare unlike the stock market, which has much more volatility than the housing market.