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Cash In on a Housing Revolution

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17.10.2020

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The Dow Jones industrial average posted its best quarter in 33 years on June 30, rising 17.8%. Big deal. Over the same period, the S&P Homebuilders Select Industry index was up 47.6%. The sector was devastated by COVID-19, and it is almost certain that builders’ revenues and profits will decline in this year of high unemployment and stay-at-home orders. But stock prices reflect expected, not current, earnings. Investors are looking to the future, and they like what they see. In fact, we may be on the brink of a housing revolution.

COVID will change the home-buying landscape for the better, in part by creating more homebodies. During the epidemic, homes became the center of nearly all family activity—recreation, entertainment, dining, education and work. Equity in a family home is the number-one asset for households, accounting for about one-third of net worth, collectively. If I’m right, it will represent a larger proportion in the years ahead.

By a three-to-two margin, Americans told Gallup in April that they prefer to keep working from home after the pandemic is over rather than going back to the office. If you telecommute, you can live anywhere, so you can afford a bigger place, beyond the city and close-in suburbs. A Harris Poll found that one-third of respondents said they were considering a move to a place less densely populated.

Exodus to the country. According to the National Association of Realtors, buyers want to move farther out so they won’t be so close to neighbors who might be infected, now or in the future (see Timely Reasons to Buy a Vacation Home). The mayhem that followed police violence this spring has also led to some disenchantment with urban living, but the nation’s three largest metropolitan areas—New York, Los Angeles and Chicago—were already losing population. Moving to the exurbs and buying a bigger house with entertainment rooms, giant kitchens, pools........

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