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We're in the Sixth Inning of the Housing Boom

By Dr. Steve Sjuggerud
Monday, April 3, 2017

"It's Time to Buy a House," I said in a DailyWealth headline in July 2009.
 
Back then was an incredible moment... There were no buyers!
 
But eight years have passed. Times have changed... Where are we right now?
 
To find out, let's look back briefly – and then look ahead...
 
Between 2009 and 2011, you could make offers on a house that were 25% – or even 50% – below the asking price... and occasionally land an "A" grade property at a "D" grade price.
 
I know this because I did it... Back then, I managed to buy a property for more than 90% off its peak price. The seller needed to sell, and I was the only offer.
 
Today, times have changed – dramatically.
 
One way to see this is by tracking the "sentiment" of homebuilders...
 
Homebuilders were incredibly optimistic about their prospects in 2005 – right before the housing market peaked and crashed.
 
As the market crashed, pessimism set in... Homebuilder pessimism set a record in early 2009. Take a look...
 

Ah, but look where we are now in builder sentiment. We are at the same levels we saw before the last major housing crash... right?
 
Let's take a closer look at this...
 
Last time, house prices didn't fall into a legitimate downtrend until 2007 – a couple of years after builder sentiment peaked.
 
On the flip side, house prices didn't genuinely start a new uptrend until 2012 – again, a few years after builder sentiment bottomed.
 
Take a look...
 

This same situation likely applies to housing prices today...
 
Clearly, we are no longer at the bottom in the housing market. Homebuilder sentiment is at a 12-year high – at levels not seen since the last housing boom.
 
But we have to consider the whole picture.
 
I've talked about this many times... I believe we have plenty of upside in house prices – primarily because there's no supply of homes to buy.
 
THIS is what the builders are excited about! With no supply of new homes, they KNOW they can keep raising prices.
 
We are clearly not at the bottom in housing. But to my mind, with no supply of houses, we are clearly not at the top in housing either. And (if you recall what happened during the last housing bull market) the biggest gains are made in the final innings of the boom.
 
The first inning – 2009 through 2011 – is in the rearview mirror. Now we're in the sixth inning. We should have a few more years of good times – and they could be really good times.
 
Stay on board in housing... It's still not too late to get in and take advantage of the significant upside we're seeing now.
 
You can still win the game. But don't hesitate... The clock is ticking. Your window of opportunity is closing fast. Get on it!
 
Good investing,
 
Steve




Further Reading:

"If you are looking to buy a home – but you're worried that the housing market is 'in a bubble' – then please, stop worrying," Steve writes. Housing may look expensive in cities like LA... But one nationwide factor points to plenty of upside ahead. Learn more here: No Bubble in Real Estate – Not Even in Los Angeles.
 
"I think it's one of the best things Americans can do with their money," Steve says of U.S. residential real estate. "But as of today, the 'free money' is behind us." Things are starting to change as we hit the middle innings of this boom. Read more here: The Free Money Is Over in Real Estate.

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
Darden Restaurants (DRI)... chain restaurants
Panera Bread (PNRA)... chain restaurants
Dave & Buster's Entertainment (PLAY)... arcades
Walt Disney (DIS)... entertainment
Twenty-First Century Fox (FOXA)... entertainment
CBS (CBS)... entertainment
DISH Network (DISH)... satellite TV
Netflix (NFLX)... home entertainment
Activision Blizzard (ATVI)... video games
Scientific Games (SGMS)... gambling terminals
Penn National Gaming (PENN)... casinos
Wynn Resorts (WYNN)... casinos and resorts
Carnival (CCL)... cruises
Royal Caribbean Cruises (RCL)... cruises
Priceline (PCLN)... online travel
Shopify (SHOP)... e-commerce
Euronet Worldwide (EEFT)... electronic payments
Apple (AAPL)... consumer electronics
iRobot (IRBT)... robots
Microsoft (MSFT)... software
TrueCar (TRUE)... automotive pricing
Annaly Capital Management (NLY)... mortgage REIT
KB Home (KBH)... homebuilder
NVR (NVR)... homebuilder
DuPont (DD)... chemicals
Dow Chemical (DOW)... chemicals
Reynolds American (RAI)... tobacco

NEW LOWS OF NOTE LAST WEEK
 
Hess (HES)... oil and gas
First Solar (FSLR)... solar power
GGP (GGP)... dying malls
Macy's (M)... department store
L Brands (LB)... clothing retailer
Bed Bath & Beyond (BBBY)... home-goods retailer
Rite Aid (RAD)... drugstores
Fitbit (FIT)... "cocktail party" stock
Boston Beer (SAM)... beer

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