The world economy has been on an incredible run of sustained prosperity, growth and overall success over the past decade since the last recession. This has taken the housing market on an straight line upwards when it comes to pricing for existing homes. Buyers have found the market to be very competitive and the issue has often been that the demand for existing houses has far outweighed the supply that is in the market.
My money house is an example of a brokerage account that has hit on the major investment trends in the last decade. Investments are really hard to time when it comes to the stock market as has been proven over and over in the last one hundred years, but my money house has a great record of matching investments with long term macro economic trends.
Buyers of houses often face the decision between waiting out the bull market and trying to get in while prices are still rising. Again, the short term decision making can be very difficult because you never know which way the market is truly going and if the economy hits a recession housing pricing can go the other direction quickly.
The reason that housing has become so tied to overall global economic conditions is that the economy is very consumer driven. That does not just mean products and traditional manufacturing companies. Services have become a large component of the economy as the consumer has really embraced the monthly fee payment for services. One example of this is software as a service. However, the areas of growth within the global economy like services have matured and therefore are becoming more and more difficult to come by. That is why the fears that a recession is looming are justified.
The core problem is that so many people have called the top of the bull market in recent years than almost no one believes the recession calls by economists anymore and many think they are politically driven. Other people believe very much in the recessions fears and they believe there really has been a confounding issue of irrational exuberance in the market that has caused it to go straight up over the last decade and it is destined to go back down any day.
Given that the economy has always been cyclical in nature there is no reason to believe that recession won’t occur in the next few years, but it is anyone’s guess what will be the catalyst for the downturn. For housing buyers this means there are no good answers to their questions which leads to more speculation. Nevertheless, the best way to make decisions is for the long-term and over that time horizon, housing has always been a great investment.
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