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U.S. Homes: Now the Best Deal in Recorded HistoryBy
Wednesday, June 1, 2011
Now is literally the best time in recorded history to buy a house in America...
Right now – today – U.S. real estate is the most affordable it's ever been. Ever.
When I say "affordable," I'm looking at three things: house prices, mortgage rates, and incomes.
With the Affordability Index near 200, the median family has 200% of the income necessary to buy the median home (or more specifically, to qualify for a conventional loan on the median home).
It's easy to see where we are now...
 Right now, as you know, house prices are sitting near new lows for this cycle, down by roughly one-third (depending on who's counting). And right now, mortgage rates – after ticking above 5% earlier this year – are all the way down to 4.5% again, near all-time lows.
So it's simple: With the worst house-price crash in American history, combined with the lowest mortgage rates in history, you can now afford more home than ever.
Meanwhile, hope is gone. Everyone thinks housing is hopeless. That is when a bear market ends and a new bull market begins.
At a conference I attended last month, some speakers spoke woefully of the large supply of houses for sale. That will take care of itself in time. Others bemoaned the certainty of higher interest rates in the future, which would hurt housing. But they shouldn't be so certain...
Twenty years ago, Japan faced a housing bust similar to ours. Japan's government has cut interest rates to near zero and printed money. And long-term interest rates in Japan currently sit around 1%.
Even rising interest rates won't kill housing... In the 1970s, interest rates were rising, and house prices outperformed stock prices.
The story is simple: House prices have fallen more than ever... And mortgage rates are lower than ever. If you can buy a house now (and want one), go for it.
Now is the best time in American history to do it.
Good investing,
Steve
Further Reading:
Check out some of Steve's recent real estate essays here...
By buying yesterday, I didn't do anything you can't do. I just happened to get off my duff and do it!
Don't buy real estate at close to market price, betting on a rise in price. But if you need a home, go out and get one.
Based on the 40-year history of the Housing Affordability Index... houses are more affordable than they've ever been.
You can listen to your neighbors, the government, or the news media complain about how terrible housing is. Or you can listen to the advice of the best investor in history...
Market NotesSILVERCORP SAYS THE WORST IS OVER After getting pummeled in May, silver stock bulls are seeing glimmers of light. Let's call one of those glimmers "Silvercorp holds the $10 level."
Along with royalty collector Silver Wheaton, the $2 billion market cap Silvercorp (SVM) is considered one of the "Cadillacs" of the silver stock group. It controls several of the richest mines in the world. It's run by a respected management team. It even pays a dividend (a rarity in the capital-intensive mining business). This makes it a vital company for gauging the market's attitude toward silver stocks.
From mid-2010 to early 2011, the market's attitude was "Yes, please." SVM enjoyed a huge run from $6 to $13 (A). Then the "New Year's selloff" in precious metals took SVM down to $10 per share (B). During silver's awesome rise from $27 per ounce to $50 per ounce, the stock rallied to $16. (C). Finally, the awesome silver selloff we warned you about on April 29 took SVM back down to its old low of $10 (D).
But when it comes to volatile silver stocks, the market's attitude can change in an instant. And elites like SVM have dug in and stopped falling. May was brutal for silver stocks... But the storm is over, and the sun is starting to come out. Right now, we favor the long side.
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