Houses of Wealth
It’s been a while since we’ve talked about the housing market, but we can’t ignore the longstanding effects of this run on homeowners for years to come. For those unfamiliar, house values have jumped by a ton ever since the pandemic due to rising demand and low supply. This, mixed with rising commodity prices in things like lumber, have led to the hottest housing market since 2007, but a healthy one this time.
Although it’s starting to decelerate, some significant statistics are coming out of this. The Federal Reserve estimates that American homeowners have gained a collective $6 trillion in housing wealth in the last two years, which doesn’t include rental equity. That is an absurd amount, but it holds a lot more than the face value. Cornell studies find that families who experience home price growth are more likely to send their children to college, and this especially helps minorities as they are disproportionately affected in the housing market. Unfortunately, this also works in the other way as minorities who already had trouble entering the market are locked out even further. This goes for the youth, and statistics reflect this very well. When it comes to that $6 trillion, a majority of it went to baby-boomers and Generation X, with Millennials facing struggles when it comes to market entry. Many economists see this event as a permanent thing in the housing market, and interest rates won’t make much of a dent due to the strong demand.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.