Housing supply is low and mortgage rates are high
Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Fortune CBS News in an article — by Tim Maxwell, “Should you wait to buy a home? Here’s what experts say to do” — regarding whether you should buy a home now or wait?
“As long as the economy does not enter a severe recession, housing could be a heads you win, tails you don’t lose situation,”
Game of Homes âš”
Of course, every person’s and every family’s financial situation is different and should be judged separately. Nonetheless, there is an overall home supply shortage and about half a dozen factors supporting housing prices, thus, if you can find a home you love and can afford, don’t overpay for it, but yes, a purchase may be in order.
Home prices may stay elevated for several reasons — which I term “Game of Homes” — including, 1) Lack of supply, 2) Slow build out of new homes, 3) Strong residual pandemic demand, 4) Demographic population and immigration growth, 5) Price inflation, 6) Demand from Millennials forming households (as there are more Millennials than Boomers), 7) Remodeling projects and additions that continue to add value, 8) People escaping their high-tax state but keeping their old home, 9) Individuals as well as large funds purchasing supply as a long-term investment to lease out, and 10) Low mortgage rates on most owner occupied homes which means that owners are unwilling to sell or trade their current house if they have to buy their new home at a much a higher rate.
Quoted article excerpt is below:
“As long as the economy does not enter a severe recession, housing could be a heads you win, tails you don’t lose situation,” says Michael Ashley Schulman, CFA at Running Point Capital Advisors. “If you buy now and interest rates increase from here, monthly mortgage payments will probably increase even if home prices come down a little, but you’ll be locked into a lower than market rate; and if interest rates decrease, home prices may jump higher, and you could refinance your home to a lower mortgage rate.”
Home is any four walls that enclose the right person.
Helen Rowland, American journalist and author; from her 1909 book “Reflections of a Bachelor Girl”
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-58
