Millennials Face a Critical Housing Shortage

Millennials are unable to find houses that meet their growing demands in an affordable price range — especially in places like New York and San Francisco.

Did you know that the average age of a house in the United States is 37 years old?

Even worse, 38% of all the houses we have in the U.S. today were built before 1970 — that’s nearly 50 years ago!

That means if you’re a millennial and a first-time homebuyer, there’s a high chance that your new home is much, much older than you.

And in many cases, that’s fine. A lot of people dream of owning historical homes or houses in need of renovation.

However, considering the fact that millennials are the largest generation in history, more people in their mid-30s or younger are buying homes than any other age group.

A Solution for the Housing Market

Right now, millennials are unable to find houses that meet their growing demands in an affordable price range — especially in places like New York and San Francisco.

These markets have been going up for a long time, and purchases have been slowing down due to people simply being priced out.

And, of course, there are also the doom-mongers who are calling for a housing crash. People are in a constant state of fear of a crisis.

So, in today’s Winning Investor Daily, I talk about what I believe could be a solution to the issues in the housing market – homebuilder stocks and the construction sector.

Check out the video below:

Hey, this is Paul with this week’s Winning Investor Daily.

This week, I have something really interesting that most people, I believe, are not thinking about.
So, if you’re looking for a house, you may have noticed that there are simply not that many houses. And if you want a new house, that’s even harder to find.

I recently read this article that really is a shocker: The median age of a house in the United States is 37 years old. And even more shockingly, between 2010 and 2016, we just added three million units.
Now, I know that sounds like a lot, but really it’s like a tiny, tiny number of units because it represents about 4% of the housing stock. And when you read this article even further — which I’ve provided a link to here — between 2000 and 2009, the houses that were built represent just 16%.

So, 38% of all of the houses that we have in the United States were built before 1970. We’re talking about 48 years ago — that’s when these houses were built!

And I can tell you that while housing and construction techniques are quite good, they are simply not intended to last 48 years without an enormous amount of money being put into it to keep it refurbished and maintained.
So, we need a housing boom to make up the fact that we have not been building enough houses for about 10 years now.
The fact that so much of our housing stock is really depleted — meaning that, if you went in and looked at one of these houses you’d go, “Wow, I’d have to put a ton of money into this house to make this livable and to make this come up to modern standards of what most people expect today.”

I’ve been telling you about this situation since February 2016 as part of the coming of age theme that I invest around in my Profits Unlimited service because we have this group of Americans that are termed the millennial generation.
They’re ninety-two million strong — the largest generation in history.

And they’re coming of age, meaning that they’re arriving to their mid-thirties. This is the time when you buy a house and start a family. They are out there in force looking for houses, and I bet that they are feeling some frustration that they can’t find a house.

So, I recommended back in February 2016 that you buy an ETF. It is the iShares U.S. Home Construction ETF (ITB).
ishares home etf

This is the U.S. Home Construction index. If you had bought it when I told you about it in February 2016, you’re up about 40%, or so.
However, from that chart you’ll see that it says year-to-date, it’s down a little under 30%. So, this ETF has gone down a lot. What’s going on?

Now, when you look at it, you would think that there’s perhaps a crash going on or something like that. And, in truth, really what this is is largely fear.

There’s fear of a housing crash. There’s fear of a crisis. And, truthfully, I believe that a lot of this is really doom-mongering, which is that the biggest issues with real estate are that we have too few houses for people to buy in so many markets, particularly the markets in the middle of the country.

We simply don’t have enough houses to meet the demand that’s out there. And then, we have this issue that in some number of markets, particularly on the coast — San Francisco and New York — prices have been going up there for a very, very long time.

And there, they’re seeing weakening because, in many cases, there’s too much supply. That’s because those markets have been going up a long time, and also it’s been the higher end of those markets that have been going up.
So a lot of people have simply been priced out.

Now, the fix for the vast majority of the country is for us to simply build a lot more houses. Tear down the old ones and put new ones in their place that meet the expectations and demands of the millennial generation and other people that are looking to buy houses that expect a modern, new house that is appropriate for our time.

Those include any number of features whether it be solar panels on the roofs, various e-features — internet connections that make it very easy — switches and things like that.

As we build more of this, it’s going to fix the problem of not having enough houses, and prices will moderate. Supply will naturally fix the fact that in the places where prices have been rising the fastest, those will moderate. And that’s a good thing.

That’s not a reason to fear a crash. If more houses come, it will meet the demand, that will moderate prices and that’s a good thing.
Even with all that, we’re still going to need to build houses for a very long time — five, seven and maybe even 10 years.

All of that means that sooner rather than later, this ITB ETF is going to turn around. And I believe that it is going to zoom higher. Sure, it might be volatile for a few more weeks, and maybe a month or two.

But, sooner or later, this is going to go up, and I believe it’s going to go up a lot because of the vast magnitude of the gap between the demand for housing and the supply.

Now, if you’re interested in other stocks that focus on the millennial generation — because housing, for sure, is a play on the coming of age of the millennial generation.

It’s their demand that’s going to drive the stocks in this ETF — home construction stocks like Home Depot, Lowe’s and others — you should also check out my Profits Unlimited service.

We take a very unique focus on the millennial generation and find stocks that are set to rocket higher as a result of what they are doing to our economy.

So, check into my Profits Unlimited service. Also, please give this video a thumbs up, subscribe to this channel if you’re not already. And please share it with your friends and family so we can continue to make these videos for you.

I’ll have another great video for you next week. Until then, this is Paul Mampilly for Winning Investor Daily.

Invest in Millennials with Homebuilder Stocks

Now, if you’re a longtime reader of Winning Investor Daily, then you know I recommended the iShares U.S. Home Construction ETF (ITB) back in February of 2016.

Although it’s currently down a little more than 30% since the start of the year, this home construction ETF is a good investment as homebuilder stocks will be making a comeback. And it’s great exposure to the millennial generation mega trend that I focus on in Profits Unlimited.

That’s all I have for this week. I’ll be back next week with another article for Winning Investor Daily.

Regards,

Paul Mampilly

Editor, Profits Unlimited

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