How real estate went from drag to driver

The economy has been weak lately, but one bright spot, among others, is housing. Unlike the China property bubble, we’re getting healthy growth. We already put our housing problems behind us.

THE SECTOR SURVIVED A SIGNIFICANT SLUMP

I’ve told many clients and classes that our recent real estate woes prompted a depression. Not in the economy: In property and related sectors. Why do I call it a depression?

ONE MILLION IS THE MAGIC NUMBER

We have good numbers for housing as far back as 1959. When you look at building permits issued, the rule-of-thumb is under a million per year is low. Even in the rough 1980s, there was only one year under a million. This during two recessions and high interest rates, sometimes higher than 20 percent. High rates we’ve never seen again.

What did we just endure starting in 2008? The Census numbers say we had six straight years of under-a-million permits! It was an unheard of slump! The only other likely time it was worse was during The Great Depression. We don’t have data for this early time but, since our economy dropped by a quarter, it’s likely housing was weakest then.

So congratulate a builder or real estate agent the next time you see one. If they survived that then they can climb Everest, land on the moon and certainly help you with your house.

HOUSE PRICES AND WEALTH MOVE UP

According to Realtor.org, home prices will be higher from 2014 until 2017. All four years are estimated to be up in value. Existing homes will move from over $208,000 to almost $240,000.

This is helping folks make up the $7 trillion lost in the recession. Bloomberg.com says this amount has all but been made back, getting us to even. From here, new price increases means new wealth.

BE IN THE GAME

Just like the lottery, but a lot more secure, “you gotta play to win” with investing. You can profit from real estate. It’s not too late. It looks like it will keep getting better. And every portfolio should have a sliver of real estate for risk diversification, inflation protection and high income.

To learn how to add property to your portfolio request a free copy my report, "Producing Large Portfolio Income."  Visit RetireIQ.com to request your report, giving you ideas on how to generate 5-7% annual portfolio income.

You can own U.S. and international real estate or both. Choose the one paying the most and cheapest in pricing. Then add other unique assets for more income.