Real Estate

Bubblenomics!

Here we are again with residential real estate jack up to the moon as the chart below (just scroll down) clearly shows the unaffordability of home ownership.  Those who do buy at this level with 43% of their income going to a mortgage will struggle for years until inflation finally bails them out. 

The cost of course is not just the mortgage there is maintenance  a common rule of thumb for estimating residential maintenance requirements based on square footage is to budget roughly $1 per square foot of living space annually for maintenance costs; meaning a 2,500 square foot home would need around $2,500 per year for upkeep.  Then there is the beloved HOA fees that can range from anywhere from $100 per month along with some as high as $500+!

IMO residential real estate is not going to crash as we saw during the Great Financial Crises they simply will sag in price then rise in price over the next 10 to 15 years UNDER PERFORMING the rate of inflation.  Simply put rising around 1% to 2% while inflation remains around 5%.  Many will end up selling at an illusionary profit with proceeds that have purchasing power significantly reduced.