US housing – just settling in

The idea that the US housing market is nearing bubble territory is far removed from reality. Prices might be rising, but affordability is good, household leverage is low, both on a notional level and with respect to debt servicing costs as a share of income. Supply is constrained and the pandemic recovery should continue to underpin demand. Fundamentally it’s cheap. In an economy experiencing higher inflation and with access to low-cost long-duration debt, housing looks close to a perfect asset. Even higher interest rates are unlikely to dent the story. We would be long US real estate.

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