Love him or hate him, Mad Money’s Jim Cramer has made some good calls over the years. Most recently, he has predicted that people who are worried about a pending bubble-burst are worrying about nothing. According to the Commerce Department, construction on new homes increased by 5.8% in December 2020. The last time we saw numbers this high was in 2006 before the cascading disaster that came to be known as the Great Recession. Many people see these similarities as proof that the housing market will collapse soon, but people tend to confuse correlation with causation. A booming housing market does not precede a massive bubble burst.
A robust real estate market is good for the country across the board, and the risks of another Great Recession are minimized by the numerous laws regarding mortgages, which were passed to prevent another Great Recession. More importantly, the robust housing market gives a reason to be optimistic about the U.S. economy in light of the crippling effects of COVID.
The reality is that people are remodeling their homes, and companies like Home Depot and Lowe’s are seeing their stocks surge. Retailers are also seeing a benefit from this robust housing market, as people are refurnishing their homes, even video game companies are seeing a boost in this market.
Another interesting effect of the current housing market is seen in the fact that remote work is becoming a larger aspect of the labor market, so people are moving into the suburbs. Even remote employees need to travel from time-to-time, and companies like CarMax and GM are seeing record numbers. All-in-all the booming real estate market gives reason for optimism, not fear, during this COVID crisis.
At the Chernov Team we understand that knowledge is power, and knowledge of how the real estate market is benefiting the U.S. economy overall, rather than being a precursor to disaster, is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov team always leaves the table with the most.
