Deke's Investment Blog - September 12, 2015

Real estate market still strong. More people want to live in the city near jobs. New apartments are being built, more people rent, yet apartment construction also has constraints because the price of land in the city is so high. New homes for sale are in short supply. Home prices are increasing faster than incomes. Inflation generally is not much, except for housing. New household formation is increasing and the majority of these people are renters. The homeownership rate is now at a 48 year low. Formerly a popular housing trend was to buy house in the suburbs where land and houses were cheaper. Today many people are choosing to live in a rented apartment closer to their work and social life. All this indicates something of a housing shortage. The good news is that demand for housing is larger than the supply, hence the housing market has plenty of room to run.

Source: Wall Street Journal, September 8, 2015.