Wall Street Isn't Behind the Housing Shortage

Wall Street isn't responsible for America's housing shortage. The truth of the matter isn't as clear-cut... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] Wall Street Isn't Behind the Housing Shortage By Sean Michael Cummings, analyst, True Wealth --------------------------------------------------------------- One misleading story about the U.S. housing market could turn into law... The "bombshell" article first appeared on online publishing platform Medium earlier this month. And thanks to its shocking headline, it went viral. Check it out... It's a terrible statistic. And to a passive observer of the housing market, it feels true. Heck, it even convinced Washington, D.C. to act. The day after the article came out, congressional Democrats introduced a new bill called the End Hedge Fund Control of American Homes Act. The bill aims to make it illegal for Wall Street to own single-family homes. But here's the problem... Medium's story isn't true. Wall Street isn't responsible for America's housing shortage. As I'll explain today, the truth of the matter isn't as clear-cut... --------------------------------------------------------------- Recommended Links: [Urgent Announcement From Doc]( Dr. David "Doc" Eifrig has an urgent message about his position at Stansberry Research. In a new short 10-minute update, he shares his (very rare and surprising) outlook for 2024... and an announcement that could shake up the entire financial publishing industry. This could change how you make money next year... but you must see this before the holidays are over. [Click here for Doc's holiday update](. --------------------------------------------------------------- [Is Your Bank Next?]( A powerful new trend is spreading like wildfire inside the U.S. financial system. At least 41 banks are already involved. But the Federal Reserve predicts that number will grow fast. [See if your bank is involved right here](. --------------------------------------------------------------- It's tempting to believe a small pool of investors devoured 44% of America's single-family homes this year. If that were the case, those folks might be forced to give them back. But according to data from Freddie Mac, this group of investors simply doesn't exist... Since 2000, this mortgage entity has tracked housing purchases by institutional investors (folks who own 100 or more properties). It has also tracked purchases from iBuyers – companies that use algorithms to quickly buy and resell homes in cash. Combined, institutional investors and iBuyers make up a very small percentage of the overall homebuyer market. Take a look... Since 2020, iBuyers and institutional investors have gained some ground... but they still make up less than 5% of the total purchasing market this year. That's a far cry from Medium's 44% headline figure. Real estate consulting firm John Burns has more evidence of Big Money's small footprint. The company tracks the market share of U.S. home purchases by landlords with 1,000 properties or more. These real estate "whales" only made up 0.4% of the market this spring. Check it out... By this metric, the biggest buyers aren't anywhere close to 44% of the market. In fact, their highest level on record is only 2.4%. So unfortunately, Wall Street isn't the culprit here. According to Realtor.com, the largest portion of the mortgage market belongs to plain old homeowners. By the end of 2018, Baby Boomers originated 17% of new mortgages, Generation X originated 36%, and millennials originated a sizeable 45% of new mortgages. In short, the folks behind this shocking headline at Medium are selling easy answers. But the U.S. housing picture is much more complex than that. The housing market is driven by the entire homebuying population... not a few wealthy individuals. Ultimately, the answer rests with homebuilders, not Congress. After all, the U.S. needs 2 million to 7 million more housing units in order to meet demand. There's only one way we'll get out of the U.S. housing shortage... and that's by building enough homes to meet demand. No one can pass a law to solve the supply shortage... And if you see anyone claiming otherwise, that should raise a couple red flags. Good investing, Sean Michael Cummings Further Reading While demand for homes is as high as ever today, millennials have found creative ways to hack their way into the properties they want. Here's what this "house hacking" trend means for the housing market – and could mean for real estate stocks... [Read more here](. "Anticipating a major decline anytime soon is foolish," Brett Eversole writes. The U.S. housing story is rather simple today... Too many folks are looking to buy homes that don't exist. That kind of supply-and-demand imbalance can only lead to one outcome – and it's not a crash... [Learn more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberryresearch.com. 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