Heads Up!

by Thomas M. Riddle, CPA, CFP®, Founder & Chairman of the Board
Here is another big PLUS for Americans’ wealth. Home prices are trending up nicely and that trend could last for years and maybe decades. The reason: the U.S. is facing a housing shortage. And, what happens when demand outpaces supply? Prices rise! Home prices nationally rose 6.2% in the year that ended in January, roughly twice the rate of incomes and three times the rate of inflation, according to the S&P CoreLogic Case-Shiller National Home Price Index.

America’s housing shortage is more wide-ranging than simply the coastal states. The shortage stretches from pricey locales such as California and Massachusetts to more surprising places, such as Arizona and Utah. According to Barrons, some 22 states and the District of Columbia have built too little housing to keep up with economic growth in the 15 years since 2000, resulting in a total shortage of 7.3 million units. Home construction per household remains near the lowest level in 60 years of record-keeping, according to Jordan Rappaport, an economist at the Federal Reserve Bank of Kansas City.

At the same time, it is becoming more difficult to build all across America due to shortages of land, labor and materials – trends which will takes years, or maybe decades, to resolve.

Now is a good time for renters to reconsider how home ownership can significantly add to long term wealth.

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