Infographic: 11 Visible Signs of the Housing Bubble
In 2013, we collaborated with our clients to identify ten quantitative and ten qualitative signs of a housing bubble. Each year, we review those signs to gauge where we are in the cycle. Today, eleven of the bubble signs are visible. While the risks in the housing market are increasing, so are the opportunities for success (if you don't have time to digest it all, see the video link at the bottom to get a quick overview).
- Make a ton of money. This is the time of the cycle when fortunes are historically made. Our clients are looking for opportunities to expand their land holdings and increase their market presence. Builders are pushing prices rapidly (15% year over year)—in part a function of rising costs but clearly a function of enhanced demand. Apartment developers are seeing suburban expansion opportunities. Build-for-Rent operators are experiencing insatiable demand for new product (from renters and capital providers).
- Manage your balance sheet. This is the time of the cycle when companies structure their debt to align with their assets. The publicly traded companies have already done that in two ways:
- By securing fixed-rate debt that does not mature for several years
- By purchasing land with option agreements that reduce profits a bit but allow the flexibility to minimize losses if the market corrects
Here is a three-minute excerpt from last month’s client webinar. Please let us know if you disagree with our assessment of the 20 signs. Our expert team is always available for inquiries and great ideas on how to succeed.