The hosts discuss vacation observations, loneliness cure, stock market drivers, expected returns, surprising top stock, Bitcoin ETF flows, no baby boomer retirement crisis
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Quick takeaways
Longer homeownership durations in the US are increasing, driven by reasons like reduced flipping, cost considerations, and fewer moves.
Baby boomers' stable homeownership at older ages may avert retirement crises, creating a strong housing asset for the future.
The US housing market remains robust due to low mortgage rates, high demand, and minimal bearish factors, offering optimism for homeowners and investors.
Deep dives
Increasing Homeownership Duration
The typical US homeowner now spends an average of 12 years in their home, double the time from two decades ago. This trend can be attributed to various factors, such as the decrease in flipping homes and the high costs and frictions associated with selling and moving. While it may reduce housing supply, longer homeownership durations have advantages, including avoiding fees and reducing the need for frequent moves. Additionally, the increasing number of baby boomers retiring and staying in their homes contributes to this shift. Overall, longer homeownership durations have become more prevalent and are seen as a positive trend.
Stability in Housing Demographics
Demographic data reveals that homeownership stability has increased over recent years. Nearly 80% of baby boomers own their homes, setting a foundation for less pronounced retirement crises. With 40% of boomers residing in their homes for 20 or more years, the longevity of homeownership provides a valuable asset. While millennials may exhibit different preferences and shorter stays in homes, the current trajectory of housing demographics indicates a stable housing market for the foreseeable future.
Positive Outlook for US Housing Market
With low mortgage rates, steady demand, and a lack of bearish factors, it is difficult to find a reason to be pessimistic about the US housing market. The market is supported by strong demand, evident in the all-time high number of people searching for new homes. While there may be concerns about price levels, the likelihood of significant price declines appears low in the absence of substantial interest rate increases. Therefore, the US housing market remains robust and favorable for both homeowners and investors.
Gen Z Investors and Financial Education
Gen Z investors are showing a strong interest in investing, with two-thirds of them having started learning about investing in high school or even middle school. This trend is reflected in the significant increase in custodial accounts, with the number of accounts nearly tripling in recent years. Young investors like Rachel Kim, a 17-year-old, have made profitable investments, such as in AMC stock, and emphasize the importance of starting early and understanding the ups and downs of the market.
Dave Ramsey and the Divide on Financial Advice
Dave Ramsey, the well-known financial advisor, has garnered a massive following with millions of followers on social media. However, many young professionals are pushing back against his strict approach to finance, stating that they don't want to sacrifice their present enjoyment for the sake of financial stability in the future. While it's essential to acknowledge that personal finance advice should be tailored to individual circumstances, it's crucial for young individuals to strike a balance between present spending and future financial security.
On episode 348 of Animal Spirits, Michael Batnick and Ben Carlson discuss: the people you see on every vacation, the cure for the loneliness epidemic, the biggest driver of stock market returns, the John Bogle expected returns formula, the best returning stock might surprise you, Bitcoin ETF flows, why there won't be a baby boomer retirement crisis, and much more!
Feel free to shoot us an email at animalspirits@thecompoundnews.com with any feedback, questions, recommendations, or ideas for future topics of conversation.
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