The Weekend Edition is pulled from the daily Stansberry Digest.
A Boom So Unstoppable, It Comes With Free Pizza By Corey McLaughlin
In a tight, competitive market, a little incentive or attention-seeking can go a long way... True Wealth Real Estate editors Steve Sjuggerud and Vic Lederman have written a lot recently about the red-hot real estate market... and why they think it's not ending anytime soon... With this in mind, we couldn't help but laugh at (and share) more evidence about the current state of the housing market. Here's the deal... Buy this house in Franklin Square on Long Island in New York, and you'll get free pizza. (As anyone who is from or has been to Long Island knows, pizza and bagels are probably the two most sought-after foods there.) You've probably heard of similarly minded incentives like this in homebuying and selling negotiations over the last year or so. This one is silly, but to me, it makes an emblematic – and surprisingly serious – point about the housing market today. You might think the housing boom can't keep going... But I'm here to tell you that it can – and will. And in today's essay, I'll share how you can take advantage of it. There is a big piece of demographic truth helping drive the housing boom today... Millennials – those between the ages of 25 and 40 – are now the U.S.'s largest living generation... and they're just starting to buy homes. They need places to live (besides their parents' basements) and raise their families. The pandemic accelerated the homebuying trend that was already in motion. Interest rates went to historic lows... mortgages became cheaper than millennials had ever known... the new "work from home" environment meant people could move away from the office and out of cities... and those who could afford to do so bought homes. The big picture is that demand is high. In the words of Steve and Vic, what we're seeing in the housing sector is a classic economics 101 situation. Prices of homes are rising... And companies that do business in this sector will grow immensely. From an investing point of view, this can make for great long-term investments in one of the largest parts of the American economy. As I've said repeatedly over the past year, with money-printing at all-time highs and the debt scoreboard ticking higher, this doesn't surprise us. Anything that can be nailed down to the ground (like homes) or found in the ground (like commodities) should rise in relative value measured in dollars. In other words, hard, in-demand assets will grow in value during inflationary times. Throw in simple demographic and supply-and-demand trends, and you have the kind of fundamental no-brainer that isn't easy to find.
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But while this boom has more room to run, this opportunity won't last forever either... As Steve wrote in a special report to True Wealth Real Estate subscribers earlier this month... Folks, the real estate market is hot right now. It's time to act now... before the crowd realizes the upside isn't over yet. That might be starting to happen (kind of). Earlier this week, splashed across the front page of mainstream financial news website CNBC.com was this picture and headline... CNBC also went on to describe our idea about how millennials are driving this trend... The U.S. Census found that 12.3 million American households were formed from January 2012 to June 2021, but just 7 million new single-family homes were built during that time... "The pandemic has certainly exacerbated the U.S. housing shortage, but data shows household formations outpaced new construction long before COVID. Put simply, new construction supply hasn't been meeting demand over the last five years," said Realtor.com chief economist Danielle Hale. "Millennials, many of whom are now in their 30s and even 40s, have debunked the industry's 'renter generation' expectations." But our key takeaway is different... Numbers aside, the CNBC article noted that "builders can't make up the difference" because of ongoing supply-chain issues today. Single-family home construction is actually running at the slowest pace since 1995. The article suggested that this is why homebuilder stocks have been "trading significantly lower" over the past week. That might be true. But here is why we love approaching investing as individuals rather than as a Wall Street firm married to quarterly results... If you can afford to look past the short-term concerns (which we can do as individual investors), and if you have the patience and time to think about the long term, it's easy to see the investment opportunity others are missing... People who can afford a new home today want to buy a new home today. Problem is, there aren't enough of them. It's as simple as that. And that's a recipe for higher home prices and profits for companies responsible for building them or for the "picks and shovels" companies that supply construction equipment and tools that help those companies build homes. Despite what many folks might think, this trend is not over... And we're far enough away from it ending that there is real value in putting this knowledge to work right now. It's going to take years for the supply-and-demand imbalance to work itself out. And more opportunities will present themselves until that happens. If you're looking to time the real estate market, if nothing else, know that home prices are likely to head higher from here. And if you want to put new money to work today in this sector, Steve and Vic say it's a great move. All the best, Corey McLaughlin Editor's note: In his latest free presentation, Steve dives into the "whys" behind the current real estate boom and reveals his "No. 1 big call of the 2020s." He also explains why there's more to real estate investing than just buying physical properties... and why this "mania" is not actually mania at all. You don't want to miss out on what Steve sees ahead for the red-hot housing sector. Click here for more details.
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