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Home Prices Will Survive the Everything Bubble Burst — How to Play It 

 April 21, 2022

It was fun as long as it lasted…

The Federal Reserve’s response to the epidemic helped create a bubble inside Everything.

Technology stocks, water stocks, bonds, bitcoin, even unchangeable tokens (NFTs) of bored monkeys … My nine-year-old complains that the price of Pokemon cards has dropped off the roof. Alas, I’m not an expert in valuing a vintage Pikachu card ‘.

Any bubble that feeds on an extreme monetary policy could explode as the easy money drains out of the system. This is what we see today.

Markets are complex animals. Why The price transition is not always clear.

But it could not be clearer this time. The nut market of recent years has been a result of the Fed intensifying its punchball. What we are experiencing today is a vicious hangover in the market.

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And there is one popular investment That may need more time to recover: ground floor apartment prices.

House prices in the middle

With low mortgage rates and millions of Americans stuck in a desperate home for another place, buying a home has become a top priority during the plague.

The Case-Schiller National Housing Price Index has risen 34% since the outbreak.

Prices in some cities are even more insane. In my hometown of Dallas, prices rose 43 percent in two years.

Case-Schiller National Housing Price Index

Source: Federal Reserve.

A 43% rise in apartment prices in a big city like Dallas is, so to speak, exceptional.

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Dallas is not a trendy resort town. It is a large city dominated by detached suburban homes. Apartment prices are rising at or around inflation at regular times.

After an epic rise in apartment prices, what happens next? Are apartment prices raging like everything else nowadays?

Maybe. But I was not so sure about that.

2 reasons why the millennial generation will keep house prices high

The millennial generation – the generation that everyone loves to laugh at – has grown. They finally settle down, start families and – yes – buy houses.

A recent survey by Bank of America found this Two-thirds of millennials were “reasonable” Buy a home for the next two years.

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Now, I would not settle for the exact number. I would take these survey data with a grain of salt. A survey respondent may say they “intend” to buy a home, but that does not mean they will or can. Still, the data gets more interesting as you dig deeper.

For a generation with a reputation for bias in windmills, the millennium is practical.

Regarding the reasonable price, 80% of millennials indicated a preference to buy an older home and repair it instead of buying a brand new home. And 75% of millennials start a home remodeling project after buying a home.

Most interesting of all, a larger percentage of respondents in the survey said they receive financial support from others than in previous years.

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If you’re wondering how millennials can afford homes at these prices … it seems many of them can not. They get help from their boomer parents or other ways.

So what’s the takeaway here?

Reboot to improve home

Do not expect a collapse in apartment prices. Prices may balance or fall in some markets. But demand should be strong enough to prevent the floor from falling.

And with so many millennials looking for a facility, there should also be ongoing opportunities in home remodeling stocks.

The Bottom Line: You do not necessarily have to go out and buy Home Depot Inc. (Symbol: HDToday’s inventory. HD rated 54 Medium in our stock rating system. But keep an eye out for opportunities here.

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This is a trend that has years left to operate. As the market continues to melt, I expect to find some real gems in the home remodeling space in the coming months.

To ensure profits,

Charles Saysmore_Sig

Charles Seismore, co-editor, Green Zone Fortunes

Charles Sizemore Is the co – editor of Green Zone Fortunes And specializes in income and retirement issues. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

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