Good piece here from Morningstar’s Bearemy Glaser. He cites the 6 reasons why housing isn’t on the fast track to recovery any time soon. With the exception of point 6 (I think interest rates will likely rise when the economy actually shows signs of organic growth) I couldn’t agree more with every point:
“Last week, I examined the perfect storm of factors that led to the incredible inflation of housing prices and some of the reasons housing prices have fallen back to earth. Although I do believe that prices have stabilized, there are many headwinds that will make it hard to see impressive gains coming anytime soon. This week, we will look at six reasons why demand isn’t likely to pick up.”
2. Household Formation
3. Shadow Inventory
4. Underwater Mortgages
5. More Stringent Mortgage Requirements
6. Rising Rate Environment
Read the full piece here.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.