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Why a real estate investor says 'the housing market is done in America'

·Segment Producer/Booker
In this article:
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A mixed bag of data has raised questions about how resilient the U.S. housing sector can continue to be in the face of a widespread economic slowdown.

However, one bearish investor has rendered a harsh verdict relatively early.

“The housing market is done in America,” real estate investor Grant Cardone told Yahoo Finance on Thursday. “It will never come back.”

Cardone’s grim assessment came as sales of new homes plummeted by 7.8% last Month, hitting a 5-month low, even as pending home sales notched a 1.1% gain. The investor attributed the state of the market to “a loss of mobility” among potential buyers.

“Mobility is the most valuable, single ingredient of an entrepreneur - the ability to move to where money goes,” Cardone told YFi PM.

Saying that the nature of the economy was changing, he insisted that “people have more money invested in their home than in their self-improvement” — something that was likely to shift in the future, he added.

Newly built single-family homes sold in the U.S.
Newly built single-family homes sold in the U.S.

Housing data has been decidedly mixed, but at least in part supported by low interest rates that aren’t rising anytime soon.

Still, Cardone insisted to Yahoo Finance that “real estate is the only place” he’d invest money in right now.

“I buy real estate that produces income. I rent where I live and I own property that pays me money. I will only buy a piece of real estate if it produces cash flow for me,” the investor added.

A market that’s still considered by some to be overpriced is behind an uptick in renting, which is near a 50-year high, with 36.6 percent of Americans doing it, according to the Pew Research Center.

Cardone has seen that rise first hand, and said the baby boomer generation could be the cause.

“We’re going to rent to 80 million baby boomers in this country. Baby boomers are going to become the biggest renters in the country and millennials will follow,” Cardone said.

Sarah Smith is a Segment Producer/Booker at Yahoo Finance. Follow her on Twitter: @sarahasmith

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