By Phil Anderson, Editor, Cycles Trading with Phil Anderson
If you want to make life-changing, long-term gains, land and real estate are a great bet.
Why? Because the price of land almost always goes up.
My experience and decades of research all point in this direction.
A long-term 2017 study that tracked the performance of global asset classes between 1870 and 2015 concluded:
The returns of housing as an investment have been documented as far back as 1870. Jordà et al., (2017) demonstrate that from 1870-2015 investing in global housing produced the best long-term returns of any asset class, including equities. Not only has housing outperformed equities, it has done so with less volatility.
No surprise there.
Real estate outperforms other asset classes easily.
It absorbs capital gains like a sponge.
If you want to grow your income, you need real estate.
Real Estate Outperforms Income Growth Too
But before we go on, welcome to Cycles Trading with me, Phil Anderson. My aim with this three-day-per-week e-letter is to introduce you to the most powerful knowledge for building wealth. That is, learning the importance of the 18.6-year real estate cycle and its key relationship to understanding stocks.
The fact is that no one else studies the market like this.
Most people are either “real estate people” or “stock people.” Very few are both. But by only looking at half the story, more often than not, they miss what’s really moving the market, and therefore miss the opportunity to profit from those moves.
By regularly tuning into this e-letter, we’ll help you understand the full story and show you how to make the most of any market.
Today, I’ll show you how real estate is the best long-term store for your wealth.
That’s because, for most people, their main source of income is their salary.
And over time, salaries tend to grow.
But they don’t grow fast enough. Real estate is always ahead.
In the chart below, I plotted the ratio of housing prices to median household income in the United States.
If the ratio goes up, real estate grows faster than income. If it goes down, income growth is ahead.
See for yourself.
We are at the highest housing-to-income ratio levels since the 1950s.
What does it tell me?
The real estate cycle isn’t over.
Real estate continues a massive bull run that started after the Great Recession of 2008-2009.
If you look at the chart, you will see how strong and quick this latest leg of the real estate cycle has become.
It was so fast economists don’t know how to explain it.
But my regular readers know that there’s nothing particularly strange about the speed or the magnitude of this growth in the second half of the real estate cycle.
Real estate is unstoppable. While everybody else is focused on wages and inflation or worried about stocks, real estate has been quietly taking the gains… and will continue doing so until 2026.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson