With Housing, You’re Probably Lucky Or Screwed - InvestingChannel

With Housing, You’re Probably Lucky Or Screwed

Proprietary Data Insights

Top Residential Construction Stock Searches This Month

Rank Name Searches
#1 Lennar 7,961
#2 KB Home 5,293
#3 D.R. Horton 4,043
#4 PulteGroup 1,886
#5 NVR 1,071

Source: Google Finance 

In April, The Juice suggested taking a look at homebuilder PulteGroup (PHM)

Since then, like most of the rest of the market, PHM took a hit. However, over the last month, it has regained almost all of the ground it lost amid the carnage. 

Why is PHM Up? Probably a combination of two factors. 

One, while there’s pressure on homebuilders in the current environment of decreasing demand, most people don’t expect an all out housing crash like we saw in 2008. Instead, we’re anticipating headwinds, not devastation.

Two, PulteGroup manages its business well, minding its cash amid the slowdown and maintaining the dividend it has managed to increase each of the last four years. 

We’ll get more color on PulteGroup – and homebuilding in general – when the company reports earnings on July 26. The Juice will listen to the earnings call and provide an update shortly thereafter.

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With Housing, You’re Probably Lucky Or Screwed

Key Takeaways:

  • In a sea of bad news, there’s actually good news on housing. 
  • Only thing is you have to be already set and okay with staying put. 
  • Even with a slowdown commencing, owning and renting remain frighteningly unaffordable. 


Bad news tends to dominate most headlines. 

Makes sense. Not only does bad news sell, but the need exists to help people make sense of the bad news. Particularly in the area where so much of the present bad news lies – housing.

However, There’s Actually Some Really Good News 

We’re not talking about the modest slowdown in home prices and rents. Doesn’t make either affordable. 

Instead, what if you’re not looking? What if you haven’t been in the market to buy a home or rent an apartment over the last year or so? If not, you might be sitting pretty. 

Amid all the bad news you probably missed this, but: 

  • Roughly 51% of homeowners have a mortgage rate under 4%. 
  • About 32% (including folks who are mortgage-free) have a rate under 3%. 

As For Renters 

How about all of the apartments governed by state and local rent control laws? 

For example: 

  • In Los Angeles, rent control covers 7 out of 10 units. 
  • Rent control covers more than 60% of apartments in San Francisco. 

Of course, not every city has rent control. And it has downsides. In California, once a tenant moves out, the landlord can charge whatever they wish. From that new rate, rent control laws take hold again. Plus, sometimes rent control can prompt property owners to skimp on upgrades and maintenance. 

The Juice is just trying to squeeze in some good news before the bad.

Source: Redfin

If you’re not lucky enough to have secured a low mortgage rate when the getting was good, it’s not a pretty picture. The typical mortgage payment comes in at $2,387, as of last week. 

Earlier this week, The Juice noted that in Q1, the average American wage or salary employee made $4,148 a month. Responsible budgeting says you should commit no more than 30% of your monthly gross income to housing. On $4,148 a month, that’s up to $1,244. 

Even if you stretch yourself (and you absolutely should not), Redfin’s interactive chart shows you can’t touch much house in America. 

At 5.5% interest, assuming a 20% down payment, you can only afford a $250,000 home if you want to keep your payment at $1,500 a month. At the moment, the median sale price of a home nationally is $428,379. And, at that median, you’re looking at an $85,000+ down payment. 

The math doesn’t look any better for renters. 

Of the 50 largest metro areas in the US, none – The Juice repeats, none – have median rent anywhere near $1,244. If you’re making $4,148 a month, you might have no choice but to stretch closer to $1,500. Even in these places. 

Source: Redfin (as of June, 2022)

And that’s not even in the New York Tri-State area, Northern or Southern California, Seattle, or Boston where rents are truly insane in the membrane

The Bottom Line: Given the proliferation of absolutely warranted bad news headlines on housing, it’s clearly not the time to be looking for a place to live. However, if you’re already set in a home you own or apartment you rent, you might actually be eating popcorn as you observe the carnage from the proverbial sidelines. 

Sometimes it’s definitely better to be lucky than good. Or a healthy mix of both.

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