Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.
That’s a direct quote from a fasinating article by Shawn Tully, entitled, Its Time to Buy Again from Fortune magazine. His article starts with information from Mike Castleman, the founder and CEO of Metrostudy, which has spent more than three decades tracking real-time data on the country’s inventory of new homes covering 19 states, or around 65% of the U.S. housing market..
“I’m a dirt-road economist who sees what’s happening on the ground, and in 35 years I’ve never seen a shortage of new construction like the one I’m seeing today,” declares Mike Castleman. “The talking heads who are down on real estate will hate to hear this, but America needs to build a lot more houses. And in most markets the price of new homes is fixin’ to rise, not fall.”
Two basic factors are laying the foundation for dramatic recovery in residential real estate
The first is the historic drop in new construction that so amazes Castleman. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting.
The new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.
