Why We’re Optimistic About the Housing Market

Expert insights are painting a bright future for housing when the economy bounces back – and it will. We may be facing challenging economic times today, but the housing market is poised to help the economy recover, not drag it down.

According to research done at First American Title Company 1:

  1. The housing market is not currently overvalued: If housing were appropriately valued then house-buying power would equal or outpace the median sale price of a home. This was situation in 2007-2008. Currently, “house-buying power is nearly twice as high as the median sale price of home, implying that housing is not overvalued, and is in fact in a much better position entering this potential recession than it was ahead of the last.”
  2. The housing market is currently “underbuilt”:  This means, house demand currently outpaces supply. This has been the case since 2009. In 2018, for example, 1.2 million households were formed, but only 860,000 homes were produced. This means there was a housing shortage of 340,000 homes!
  3. Home equity is at historical highs: This means that homeowners today have very high levels of tappable home equity, which means they have more cushion than usual to help withstand potential declines in prices. Furthermore, the housing market has traditionally aided the market in escaping recessions.

1. Source: https://blog.firstam.com/economics/why-the-housing-market-may-weather-coronavirus-impact-better-than-the-great-recession


The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Van Steyn Partners does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Van Steyn Partners will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

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