Game of Homes🛡⚔

U.S. housing prices should remain supported. Running Point and I were quoted by International Business Times in an article—by Panos Mourdoukoutas, PhD, “Housing Market In 2024: Another Boom Or Another Bust?”—regarding our outlook on U.S. housing trends. Here are our thoughts.

Home prices shouldn’t collapse

Every family’s financial situation is different and should be judged separately. Nevertheless, there is an overall home supply shortage and nearly a dozen factors supporting housing prices; thus, if you can find a home you can love and afford, don’t overpay for it, but a purchase may be in order.

We don’t see home prices collapsing in the U.S. for several reasons which we 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 increasing demand
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 not selling their old home (thus reducing supply rather than keeping the status quo)
9. Individuals as well as large funds purchasing supply as a long-term investment to lease out
10. Buyers psychologically accepting a new normal of higher prices and higher mortgage rates

As long as the economy does not enter a severe recession, housing could be a heads you win, tails you don’t lose situation. 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.

Quoted article excerpts are below:

Michael Ashley Schulman, CFA, partner and chief investment officer at Running Point Capital Advisors, added several factors to the boom case for the housing industry, like lack of home inventories, slow construction of new homes, institutional demand and higher price expectations.

“Maybe potential buyers will balk at the higher monthly dollar payments that come with high-interest rates, maybe fresh listings will hit the market, and probably annual price increases will slow,” Schulman told IBT. “But barring a recession, there is still much to support home prices.”

Welcome to my house
Play that music too loud
Show me what you do now
We don’t like to go out
Welcome to my house
Welcome to my house

Flo Rida, lyrics from “My House”

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. 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-23-136