Asset Classes

Real Estate

More About Residential Real Estate

  • Residential Real Estate (housing market) has a huge impact on GDP (multiplier effect)
    • Real Estate transactions drive business for:  Financial, Legal, Accounting, Architectural, Building, Construction, Landscaping, etc. services
    • Real Estate transactions also drive demand for home improvements, new furnishings, new appliances, etc.

Residential Real Estate Demands

  • Long-term mortgage interest rates can impact sales significantly
  • The home price consumers can afford is driven by their incomes
  • Lock-In Effect
    • If rates rise, many people will stay put if they have locked in mortgage at lower rates
    • Moving would require them to get a new mortgage at a higher rate!

What Can Americans Afford?

  • Safe estimate is 3.5 times income
  • Translates to $217k in 2017

Residential Real Estate Indicators

  • New home sales (quantity) and average price
  • Existing home sales (quantity) and average price