Analyst: “The Long Term Fundamentals for U.S. Residential Real Estate are Sound”
There are indications the worst of the downturn is close to over, according to GMO, the Boston-based asset manager led by legendary investor Jeremy Grantham. “The long-term fundamentals for U.S. residential real estate are sound,” writes GMO analyst Edward Chancellor. When the economy eventually recovers and unemployment declines, “household formation will rebound,” he said. “Home prices will pick up together with construction. Another housing boom will follow.”
Chancellor added:
- Five years have passed since U.S. housing prices peaked. “That’s about the average amount of time it has taken for real estate markets to trough after previous housing bubbles.”
- Valuations are no longer over-stretched. For the first time since 1981, median monthly mortgage payments are lower than rents. “Following the decline in long-term interest rates, this is one of the best times ever for Americans to buy a home.”
– “9 Signs of Hope for the Housing Market,” by Dan Burrows, CBS Moneywatch, Sept. 19, 2011.