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Meredith Whitney earned her “Oracle of Wall Street” nickname by calling the 2008 financial crisis before it hit. Now, nearly two decades later, she sees fresh trouble brewing in the U.S. housing market.
“Existing home sales are tracking under 4 million on an annualized basis and that’s the worst in over 25 years. Buyers are looking for steep discounts and sellers are not willing to make those discounts,” Whitney said in a recent interview with MarketWatch [1].
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The problem, she explained, has to do with demographics. Roughly 60% of homes are owned by people over 55 and for many of them, downsizing isn’t realistic. Lower-cost alternatives are scarce and the financial hurdles of moving are steep.
“So either these folks have no mortgage or a small mortgage and the capital gains that they have to take and the costs that are required to move are prohibitive,” she noted, adding that baby boomers may not be as wealthy as many think.
That tax bite is no small thing. If you sell your primary residence, the IRS lets you exclude up to $250,000 in capital gains ($500,000 for joint filers) [2]. But that threshold was set back in 1997 — when home prices were far lower.
“Given the fact that 60% of homes are owned by seniors, that is the clear issue with affordable housing, because there’s just an inventory lock,” Whitney remarked.
She’s not the only one raising red flags. Last September, Federal Reserve chair Jerome Powell admitted the housing market is “in part frozen,” with many homeowners reluctant to sell because they’re locked in at lower mortgage rates [3].
The consequence? Persistently high prices on inventory that does exist. Combined with elevated interest rates, that makes homeownership harder than ever to achieve.
According to Realtor.com, a typical household would need to earn $118,530 annually to afford a median-priced home of $402,500 in the U.S. — more than 52% higher than the current median household income of about $77,700 [4].
Getting on the real estate ladder — starting with $250
At the end of the day, the rise in home prices also reflects the steady march of inflation over time. When inflation goes up, property values often climb as well, reflecting the higher costs of materials, labor and land. Meanwhile, rental income tends to rise, providing landlords with a revenue stream that adjusts with inflation.
That’s why real estate has long been considered a go-to investment for those looking to hedge against inflation.
While purchasing an entire home may feel out of reach due to elevated prices and mortgage rates, it’s now easier than ever to start investing in real estate.
Mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 A.M. tenant calls.
Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide, guided by proprietary underwriting and market analytics typically used by large institutions.
Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually.
Every investment is secured by real assets, not dependent on the platform’s viability. Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.
Getting started is a quick and easy process. With a minimum investment of $250, you can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest in the properties of your choice in as little as 30 seconds.
Another option is First National Realty Partners (FNRP), which allows accredited investors to diversify their portfolio through grocery-anchored commercial properties without taking on the responsibilities of being a landlord.
With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to Triple Net (NNN) leases, accredited investors are able to invest in these properties without worrying about tenant costs cutting into their potential returns.
Simply answer a few questions — including how much you would like to invest — to start browsing their full list of available properties.
Read more: Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
A golden hedge for ‘bad times’
Real estate isn’t the only asset investors lean on to guard against inflation. Gold has served as a store of value for centuries — and its appeal remains as strong as ever.
Unlike fiat currencies, the yellow metal can’t be printed at will by central banks. It’s also not tied to the fortunes of any single country or economy, making it the go-to safe haven when economic or geopolitical storms hit.
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has repeatedly highlighted gold’s importance in a resilient portfolio.
“People don’t have, typically, an adequate amount of gold in their portfolio,” Dalio told CNBC in February. “When bad times come, gold is a very effective diversifier.”
Over the past 12 months, the price of the precious metal has surged by more than 35%.
A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.
Opening a gold IRA with the help of Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.
With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.
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[1]. MarketWatch. “Meredith Whitney famously called the 2008 financial crisis. Here’s the new problem with the U.S. economy, she says”
[2]. IRS. “Topic no. 701, Sale of your home”
[3]. Federal Reserve. “Transcript of Chair Powell’s Press Conference September 18, 2024”
[4]. Realtor.com. “How Much You Need To Earn in Every State To Buy a Home”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.