Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
China Bank Run Protests - Another Potential Tiananmen Square Massacre? - 11th Aug 22
Silver Coin Premiums – Another Collapse? - 11th Aug 22
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 - 11th Aug 22
Severe Stocks Bear Market: Will You Be Among the Prepared 1.5%? - 11th Aug 22
There's a Hole in My Bucket Dear Liza, UK Summer Heatwave Plants Watering Problem Song - 11th Aug 22
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Housing Market Optimism Is Back Up to 2006 Levels... Should You Worry?

Housing-Market / US Housing Jan 12, 2015 - 10:04 PM GMT

By: Money_Morning

Housing-Market

Dr. Steve Sjuggerud writes: Housing optimism is back up to 2006 levels...

Should we worry about a 2006-style bust?

After all, 2006 was "the beginning of the end" in U.S. housing. And it kicked off the worst housing bear market of our lifetimes.


But today's optimism is not a bad thing, as I'll show.

Homebuilders are now at 2006 levels of optimism. But today is not 2006. Home prices are still "cheap" today. And I still believe home prices could rise significantly from here.

Let me explain...

Conditions in the housing market have improved dramatically after the market bottomed out in 2011.

The economy has recovered. Unemployment has fallen. And folks are in a better spot to buy homes.

This is what I expected to happen. I've written about why housing could rise for years. And I've been right so far. And now, after years of pessimism, homebuilders are downright enthusiastic about the future.

We can see this through the National Association of Home Builders (NAHB) Market Index...

This index is a survey of what homebuilders think about the housing market. A reading above 50 is positive. A reading below 50 is negative.

Today's reading is the highest we've seen since 2006. Take a look...

Seeing that might make you nervous. Anyone burned in the housing bubble will be fearful of a housing indicator at 2006 levels... Especially one that shows how excited folks are about housing.

But today's housing market is much different than it was in 2006. I don't expect a crash for one simple reason. Housing is still "cheap" right now.

This becomes painfully obvious when you look at housing affordability...

Housing affordability is a simple comparison of three things... 1) income, 2) housing cost, and 3) mortgage rates.

During the housing bubble, home buyers bit off more than they could chew. Anyone with a pulse could get a mortgage. The problem was, many people couldn't afford what they bought. High mortgage rates and housing costs made housing unaffordable in 2006.

But today, even after a big move up in prices, housing is still affordable. Take a look at the Housing Affordability Index...

Affordability is down since 2012. But it's still dramatically higher than the long-term average.

Home prices would need to rise another 20%-plus to hit their long-term average affordability. Of course affordability could also fall if incomes decrease or mortgage rates increase. But the main affordability driver over the past few years has been home prices... And I expect that to continue.

So yes, homebuilder optimism might be at 2006 levels. But today is NOT 2006. And optimism is not a problem...

We're still in the housing sweet spot. And housing is still cheap.

There's still time if you haven't bought a house. Don't miss out!

Good investing,

Steve

Editor's note: If you'd like more insight and actionable advice from Dr. Steve Sjuggerud, consider a free subscription to DailyWealth. Sign up for DailyWealth here and receive a report on the top ways to protect your money, your family, your health, and your privacy. This report will show you the best "common sense" solutions to help you protect yourself from some of the worst elements in America today. Click here to learn more.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2013 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in