Housing Bubble!!

Two exclamation points after the term bubble... that should draw 100x the interest in what lies below that fear monger title.

NO ONE wants to be the one buying at the top.  You don't go into a store and tell the cashier to sell you what your buying at the highest prices they've ever charged.. do you?

And yet that's what has  been happening in this stock market the last 10 years.  And each time... each record high  from 2013 until now has been met with the same skepticism.

It won't last!

Prices will never go higher.. the top is in.

And now here we are with housing.  Prices have never been higher.  A rabid appetite for housing has sent prices to record highs.

My opinion?

Housing has been lagging the last 10 years and is just catching up.  With interest rates so low for a mortgage you are now able to buy a house for 20-25% more for the same mortgage payment then you were just years ago.

And supply is shrinking.  You can print money to infinite... but you can't stretch the planet earth to make it bigger.

Johnny... grab me the Earth stretcher from my tool bag please... I've got to find more real estate supply.

It isn't going to happen.  I'd imagine years from now when we start populating the Moon or mars....  real estate prices will see a sharp drop.  And  when real estate listings in the gamma quadrant become available... look out below!!

But for now we only have a finite amount of real estate.  And with the money supply exploding around the globe  -  money is flowing into real estate...  an asset that you can't print more of.   Owning land is  capital preservation in its finest hour.

Real estate.

Some might say gold.. or silver.   But can your family sleep comfortably in a snow storm on a few ounces of gold?

So here were are with house prices at record highs.  They may cool off into the fall  But I don't think a crash is coming.  Why?

Supply.  We still don't have enough houses.

Lower income housing.  The government is back trying to give everyone the American dream of owning a house.  We know that didn't end well during Clintons time, but it is different this time.  And the government knows it can ill afford another housing crisis.

Case in point the  extensions of Covid forbearance from the Biden admin last week.  Can't pay your mortgage?  Let us know we will help.

What do I see to help everyone get in a home in the years ahead, which will help keep a bid under the housing market.

Longer term loan government assisted loans for first time home buyers to help monthly payment affordability.

BIG Credits to first time homebuyers from the government to help them buy a house.

Additional support and assistance to those looking to buy a house that they likely can not afford without government assistance.

The more the government gets involved in housing... the less likely they will allow it to fall at all costs.

The Wall Street Journal article last week about loan forbearance was littered with negative comments.


My opinion?

People should not be buying what they can not afford.  But!  In 2008 the big banks were bailed out.  Main street is getting its turn.  And in my opinion the Main street support has a long way to go,

I'll have more on this and my thoughts in the weeks and months ahead.  Housing was a clear driver for the financial crisis and no doubt another meltdown would be catastrophic.   I just don't see it coming with the government being as supportive as ever toward asset prices.

And what happens if the 30 year keeps dropping?  2% 30 year mortgage rates?  1.5%?  gasp!

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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