Sjuggerud: We’re now in the sixth inning of the housing boom
From Dr. Steve Sjuggerud, Editor, True Wealth:
“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!