One of the critical pieces of economic recovery in this country is the health of the housing market. Unfortunately, there have been signs recently that the housing market may not be as strong as it has seemed. Naturally, the media hasn’t focused on this issue; doesn’t fit their narrative of recovery.
It is important to see beyond the media hype, and to draw conclusions based off the facts, not the spin. This week Bloomberg reported on the recent struggles of the housing industry:
The residential real-estate rebound suffered a setback in June as housing starts unexpectedly fell to the lowest level in almost a year, curbing how much construction contributed to U.S. economic growth last quarter.
Work began on 836,000 houses at an annualized rate, the least since August and down 9.9 percent from a revised 928,000 pace in May, figures from the Commerce Department showed today in Washington. The drop was led by a 26.2 percent plunge in multifamily projects, which are more volatile than work on single-family homes.
The figures were in contrast to a report yesterday showing homebuilders this month were the most optimistic in seven years as sales improved, indicating the reversal will probably prove temporary. The slump came as Federal Reserve Chairman Ben S. Bernanke said monthly asset purchases aimed at spurring the economy could be reduced or expanded as conditions warrant, with housing one area policy makers will monitor.
"As construction ramps up, we’re bound to have some hiccups along the way," said Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. Having called for 915,000 starts, Lebas had the lowest estimate in the Bloomberg survey. “I don’t think this one data point is immediately concerning. The housing markets are going to be a driver of economic growth.”We certainly hope that the analysts are correct. A healthy housing market will contribute greatly to a long overdue economic recovery.
But what if housing doesn’t lead the recovery? A collapsing housing market would be devastating to financial markets—remember, it was the housing market collapse that sparked the stock market crash of 2008 in the first place. Investors who have their money exclusively in the stock market will be in really deep trouble. Also, if your main investments are held in real estate, right now is the time to lock in gains in value and to protect those gains (and yourself). This way you’ll avoid the trap of being house rich (maybe) and cash poor.
So what you should you do? Two words: “protect yourself.” We can help. Let us show you how to reduce your vulnerability to market risk, as well as your exposure to taxes and inflation. We eliminate market risk; in the last decade, NONE of our clients have lost a single dime in the market. Prior gains can’t be lost, either. This is why our clients have averaged over 8% during the worst economic downturn since The Great Depression.
Don’t let the risk of a housing collapse destroy your retirement hopes. To learn more, please visit www.HiddenWealthVideo.com to watch our short, ten minute video.