Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

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

© 2005-2022 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