The Rodney Dangerfield Housing Market: No Respect

“I tell ya. I’m alright now, but last week I was in rough shape ya know. Last week, I told my wife I need a home improvement loan. She gave me a thousand dollars to move out.” – Rodney Dangerfield

The next vociferous argument that media outlets are making is that millennials are priced out of the housing market. First, remember that if it doesn’t bleed, it doesn’t lead. Second, the data says the opposite. Below is a chart of housing affordability for first time homebuyers from 1986 to the end of the first quarter of 2021.

We shouldn’t feel bad for Millennials. We should feel bad the for the Baby Boomers or Gen Xers that had such unaffordable housing. Prior to 2008, housing hadn’t been affordable based on 1986 as a starting point. It may lead people to disregard the media reports. Instead, they may believe that this isn’t the problem they are making the case for or that housing affordability isn’t the most important factor. After all, we had good housing markets long before 2007’s cleansing arrived, which helped bring this awesome affordability. As Rodney might say, we’re alright now, but we were in rough shape.

“I’ll tell ya, I don’t get no respect… The other day, I got back from a business trip. I got in a cab and said to the driver, “Hey! Take me to where the action is!” So ya know where he took me? He took me to my house!” – Rodney Dangerfield

The action is on houses as we have the largest demographic group in US history (Millennials) fast-forwarding their lives toward home ownership. We, as rational and logical consumers and investors, must be creating more US single family home builds than at any point in US history? Again, no respect. Below are the US new single family home builds annualized by quarter since 1959. As investors can see, we aren’t back to any of the highs of the 50’s, 70’s or the 2000’s, despite having a smaller population and a smaller group of potential homebuyers at each of those prior points.

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Disclosure: The information contained in this missive represents Smead Capital Management’s opinions, and should not be construed as personalized or individualized investment advice and ...

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William K. 3 months ago Member's comment

Itis difficult to respect an industry that only builds huge houses and expensive condominiums. Really, how can we respect the builders of monster houses?