YOUR MARKET ANALYSIS SITE

The characters are fictitious and do not correspond to real people.

Invest at your own discretion.

Charting platform used for this analysis is provided by TradingView

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In less than 10 minutes, you will know:

1.- The most important factors when valuing a home
2.- The state of the market
And also, debate and conclusions.

1.- What factors influence the price of a house?

Housing prices are driven by factors artificially imposed by the most powerful entities such as:
1.- Interest rates on mortgages.
2.- Public aid for purchase or rental.
3.- Construction costs.
4.- Construction permits and qualification of new soil.
But prices can also be affected by the free market due to:
1.- Qualities of housing
2.- Services available inside the house and in the surroundings
3.- Supply and demand
4.- Rental prices in relation to purchase prices.

I believe that the housing market is not going to follow a general pattern and there will tend to be clear differences in the evolution of prices according to the characteristics of each home. The changes in global liquidity are going to be smaller in percentage and we have to focus on analyzing each asset individually. Saying that housing will go up or down in general will make less sense in this next decade.

2.- MARKET ANALYSIS

The price of housing has followed the increase or decrease in available housing. Now it should go down if the inventory goes up. Always taking into account that there is a lot of type of inventory and you have to look at the one you are interested in specifically.

Families are getting more indebted now accentuated by the rate hike. This leaves less liquidity to acquire or rent housing in terms of the net price. This together with the inventory discussed above may reflect a downward price.

With the example of the evolution of the price in Spain, we see how in 2007 there was a bubble where everything was going up, but the latest increases have been more moderate in the global data because the increases have occurred only in places of greater demand or in higher quality housing. Let’s say that we are not in the irrational situation of 2007.

In recent years, the number of homes inhabited by their owner has been increasing. This is because the low rates encouraged purchases and because now homeowners do not want to get rid of mortgages to rent or buy more expensive. In addition, there is no new supply and demand has been stopped by central banks with rising interest rates.

3 DISCUSSION

Below, our fictional characters, Max Caro and Cindy Nero tell us their opinions.

Cindy Nero:
Hey. So far there are no problems of defaults and the economy in the housing sector is continuing its course smoothly as we see in the mortgage delinquency graph. There is low supply and activity, but I don’t see a high price drop in the short and medium term.

Max Caro:
I think we are approaching a recession as indicated by the chart of the manufacturing sector purchasing index (PMI) that is on the decline worldwide. During a crisis, there will be more supply of homes for sale and less ability to support current rental prices. Prices will go down in my opinion.

Cindy Nero:
It is true that an adjustment has begun to be seen after previous rises, but I think that housing is a hard asset and that it serves as a refuge value at times of inflation. I don’t see a housing crisis like other times. I do predict decreases in housing destined for tourism, which I think will be impacted.

Max Caro:
I do agree that not all homes are the same. I would not invest now except in exceptional cases. The rent is not going to push the price of housing as it has done so far, rather on the contrary

Tod:

Thank you very much for the opinions. Starting from the next episode, we will discuss the most important market news.