Everything You Need To Know About The Housing Crisis Right Now - InvestingChannel

Everything You Need To Know About The Housing Crisis Right Now

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#2 AAPL Apple 323,873
#3 TSLA Tesla 314,017
#4 AMZN Amazon.com 256,007
#5 GME GameStop 198,395
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Everything You Need To Know About The Housing Crisis Right Now

Here at The Juice, we read everything we can get our hands on about housing. We spend a ton of time pulling diamonds from the rough and creating useful housing and general personal financial and investing analysis from it. 

Sometimes, an abundance of worthy insights pile up. This is exactly what has happened over the last week. So, in a second, we’ll summarize the best of the best alongside our thoughts. 

But first, speaking of thoughts. We started thinking as we looked at a couple notable changes at the top of our Trackstar list of the tickers investors have been searching for most across the platforms of our 100+ financial media partners. 

First, freaking Nvidia (NVDA). It has been the most searched stock in Trackstar for a while, but it has been some time since it generated more than double the search interest of number two, Apple (AAPL)

As we noted in Monday’s Juice, we are all for finding AI investing opportunities outside of NVDA and the other names we all know, but we’re also all for sticking with winning formulas. 

NVDA is a classic case of this as well as buying on dips/weakness. 

Some people freaked out when NVDA plunged by around $80 per share in April. At the time, it traded for less than $800. Some people freaked out again when the stock went down by about $50 over a couple of days in late May. 

Those are just two dips among many. And we’re sure there will be more. But, NVDA trades for around $1,150 a share now. If you bought when some people panicked — or at least thought twice — around $800, you’re probably sitting super pretty today. 

Second, stupid GameStop (GME). It leapfrogged Microsoft (MSFT) into the fifth spot in Trackstar. Buying weakness in a meme stock such as GME or AMC Entertainment (AMC) isn’t investing. You can’t compare it to what we said above on NVDA. And, as speculation goes, it’s of the most lame variety. 

Our sister newsletter, The Spill, recently gave AMC a 0 out of ten rating. We could not agree more. And we feel pretty much the same way about GME. 

On to housing … 

Which includes the rental market. 

Speaking of our financial media partners. We love Bill McBride, who runs the Calculated Risk housing blog. He covers rents because, as he says, “Tracking rents is important for understanding the dynamics of the housing market. For example, the sharp increase in rents helped me deduce that there was a surge in household formation in 2021 … Now that household formation has slowed, and multi-family completions have increased, rents are under pressure.”

Some tidbits on what appears to be a cooling rental market, courtesy of Bill: 

  • For nine months in a row, we have seen year-over-year percentage decreases in rent prices. 
  • Nationally, the median rent is $1,404. 
  • Across the country’s 50 largest markets, it’s $1,723.

Of course, if you go into the biggest cities you’re easily over $2,000. 

But, if you are caught in the housing crisis, you might have some bargaining power, even in these expensive places. For example, in San Francisco, the median rent across all units is around $2,700, which is actually down about a percent year over year. 

But, as we often say, price decreases in these types of places mean very little to most of us on the ground. They’re still prohibitively expensive for large numbers of people. 

As such, to find true bargains — whether you’re renting or buying — you really have to do your research. And, quite possibly, be willing to buy in places that don’t immediately come to mind. 

Realtor.com recently conducted an analysis of the top buyer’s markets. It defines a buyer’s market as a place where properties sell for the lowest price compared to their original listing price. So, you go in and offer something under asking. The opposite of a bidding war. 

You can see the list here, but we thought a place like Roseburg, Oregon was intriguing. Realtor.com puts the median list price there at $402,000. But properties start around $250,000 and stay on the market for roughly 54 days. Roseburg is three hours from Portland and an hour from Eugene, so it’s one of these in-between places with relatively affordable housing that’s accessible to larger cities. 

On the flip side, there’s Key West, Florida (median list: $1.3 million) and Breckenridge, Colorado (median list: $1.125 million). Both make the list. And, while it’s great that homebuyers there can apparently get sellers to go lower, what good is it for most mere money mortals?

Let’s say you manage to get a $1.3 million listing down to, say, $1.1 million (good luck!). As we write this, with the interest rate on a 30-year mortgage at 7.07%, you’ll be left with a monthly payment of $9,350, including taxes and insurance, after a 10% down payment of $110,000. 

This is the thing with this housing market. 

You have to be willing to live out of the way or in a city that has a long way to go (even as it’s improving as a vibrant urban place) to get something you can afford on a decent salary. 

Don’t let the headlines about lower prices fool you. They’re not lower everywhere. And, in many of the places where they are, they’re still near all-time highs. However you slice it, they remain expensive. 

Of all the housing market price data out there, we trust Corelogic maybe the most. In their latest report, they say:

  • Prices are up 5.3% annually. 
  • Prices increased by 1.2% between February and March. 
  • Miami is up 10.6% year over year. San Diego is up 9.4%, Los Angeles 6.0% and Phoenix 5.6%. 
  • Corelogic expects prices to increase 3.7%, year over year, between March 2024 and March 2025. 
  • The largest metro where it predicts a decline: Atlanta. 

The Bottom Line: One other thing Corelogic said in its report: “These price pressures reflect the overall supply-and-demand mismatch, as well as continued interest from households with larger budgets.” This further supports The Juice’s long standing thesis. 

We have been classifying our state of financial affairs as a haves and have nots economy for more than two years. Long before the rest of the media jumped on the phrase as it became obvious. As long as the haves continue to keep everything propped up, there’s no other way for prices to go than up. Because, when interest rates decline (even a little), the people on the cusp who come off of the sidelines will help drive potentially exponential increases.

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