Personal Wealth Management / Market Analysis

Ken Fisher Discusses His Housing Market Outlook

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher shares his thoughts on the current housing market. Ken acknowledges strong housing prices across much of the US and western world, yet no corresponding boom in the volume of homes for sale, partly due to supply-chain challenges.

Ken believes COVID plays a large role in rising home prices. According to Ken, as people spent more time at home due to government-mandated lockdowns, many became inspired to upgrade their home environments. Due to low home-supply growth, Ken feels near-term pricing is likely to remain relatively strong.

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Ken Fisher: For all kinds of reasons a regular thing that people have concern about when it's up, when it's down, in every which way, is the housing market. And recently, housing prices of course, have been very strong throughout most of the United States and parts of the rest of the Western world. And on the other hand, we haven't seen a huge housing boom. Housing is strong, but not overwhelmingly so in terms of volume.

Ken Fisher: And in terms of its economic impact, it's the volume that really matters more than the pricing. The pricing is really a result, in my opinion, and it's an opinion not a fact, that during COVID what people came to learn as they were cooped in from lockdowns in different timing, in different places, is that their home is more important to them than they thought it was before COVID. Because before COVID they were out and about more. They were in the workplace more, on non-work times they were out in their world more, and COVID restricted them.

Ken Fisher: And so there has been this widespread tendency to upgrade, to move to bigger, to move to what's deemed as better, to move toward further away often from where they were, to a more advantaged location—whatever that means to people in their own individual circumstance. And from that you have had a fairly heavy bidding up of pricing.

Ken Fisher: I do not think that goes away. I think that lesson was strong enough from COVID that over the next few years people will continue to value that home.

Ken Fisher: In parallel, and this is not about housing per say, but in parallel there's been another feature that I think amplifies that--reinforces it, which is that we have a long history of how much of consumer spending is on goods versus services. And of course, that wobbles around a little over time, but when we actually look at the long term, it wobbles around over time in a relatively tight bandwidth.

Ken Fisher: When COVID hit, it changed. First, some of services no one could do because things like storefront services were just shut down for the most part—not completely, but mostly. Most medical services that were not urgent emergencies were shut down for a long time. And you know that. And in that time period, as people were shut in in their homes, they started buying goods. And the purchase of goods went through the roof in all-time record, and has not yet fully come back down. And what people realized, I think, is that if I'm shut into my home, I want one of these, and I want one of those, and I want three of the other, and I want to get really good ones because I had a lousy one before. But now that I'm stuck here in my home all the time, I want to get a really good one.

Ken Fisher: And so, the purchase of goods went through the roof. And once you get all those goods that you wanted, that you like, then being back in that house becomes more important to you, and it reinforces the desire to be in a nice house with your nice things that you came to like and purchase during the lockdown periods and the fearful periods of COVID.

Ken Fisher: So, I think the pricing remains strong for some years. I don't know that the volume changes very much. And particularly it's hard for the volume to change during this intermediate term period ahead where we continue to have supply chain problems that were originally brought on by the lockdown release, re-lock down, lock down these things, not those things. Lock down over here, not over there. And then that supply chain disruption being further reinforced by what has more recently been the Russian war on Ukraine.

Ken Fisher: So that's basically my summary. And I think for the next few years, in a summary sense, we can say pricing remains relatively strong. Volume doesn't grow to be terribly robust. Thank you for listening to me.

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A series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of fisher investment or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.

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