“Someday financial markets will decline...rising stock/bond markets will no longer be government policy. QE will end and money won’t be free. Corporate failure will be permitted. The economy will turn. Someday, somewhere, somehow, investors will lose money and once again come to favor capital preservation over speculation. Someday, interest rates will be higher, bond prices lower, and the prospective return from owning fixed-income instruments will again be commensurate with risk.” Seth Klarman
Wednesday, July 29, 2015
Why Rents Will Keep Rising; and Is Buying a Home a Good Investment? (5 Charts)
"Continuing with the US economy, the
country's rental crisis is worsening. Here are two charts that tell us why
rental costs will continue to rise sharply.
1. Growth in US households is now at pre-recession levels, driving demand
Source: @SoberLook, US Census Bureau
2. At the same time rental vacancies
continue to slide - now at levels we haven't seen in some 30 years.
We continue to see ongoing shift away from
homeownership as the homeownership rate declines.
Moreover, this trend is quite clear in the
numbers of US rental vs owner occupied housing units (note that the
housing correction started in 2006).
Part of the unease with US homeownership is
the fact that if you bought a house 10 years ago, you would just be
breaking even (on average). Add to that inflation, maintenance, etc. and it
makes for a really bad investment. Of course the tightness in the mortgage
market isn't helping."