Welcome to Asset Accelerator, the weekly letter for people who make good money and want their money to finally make some too. Real numbers, no hype, one idea a week.
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My neighbor is going to retire using his home equity.
He would never say it that way, but that is the plan. He bought in 2011, watched the value more than double, and now he treats that equity like a pension. Last week he told me he does not worry about his retirement because the house keeps going up. I didn’t argue. I was not so sure the house would keep doing his saving for him, since I keep hearing conflicting data about future home prices going up…and down. So, I dug into the data.
Here is what sent me down the hole. I heard the analyst Ivy Zelman make a claim that sounds contrarian at best. She suggested that America may not have a housing shortage at all, and that 5 to 10 years from now, we could actually end up with too much housing in some places.
That’s hard to believe when homes cost what they cost and so many people who want one cannot afford one. So I went looking for the real numbers. And the first thing I found is that the experts cannot even agree on how short we are.
The National Association of Home Builders puts the structural shortage near 1.2 million homes. Freddie Mac says 3.7 million. Realtor.com says 4 million. The National Association of Realtors says 5.5 million. Every one of those comes from a credible group, and they are not close to each other.
The reason is simple once you see it. They are not measuring the same thing. The smallest number counts empty for-sale and for-rent homes in metro areas. The bigger ones add in (1) years of underbuilding, or a (2) higher number for healthy vacancy rates, or (3) people who have not formed a household at all because they cannot afford to. Realtor.com alone counts 1.8 million younger adults who are still living with parents or roommates, calling them ‘missing demand’. You can argue that one either way. But notice what is happening. A lot of what gets called a housing shortage is really a housing price problem in disguise.
Then comes the part that makes Zelman's argument worth taking seriously. The boomers.
Freddie Mac estimates there were about 32 million boomer homeowner households in 2022. By 2035, it expects that to fall to roughly 23 million. That is 9.2 million fewer boomer owners, with about 2.7 million boomers leaving their homes in just the next five years. Say that number out loud and it sounds like the front edge of a housing glut.
Except Freddie Mac does not think it plays out that way. They call it a tide, not a tsunami, and they expect younger generations to absorb most of those homes as they come of age and buy. Millennials, Gen Z, new households, immigration. On the other side, analyst Meredith Whitney, who called the 2008 crash, thinks the tsunami is real and is coming no matter what rates do. Same 9.2 million homes. Opposite conclusions.
So who is right?
Honestly, I don’t know. And I think that’s the whole point. Nobody can hand you an accurate map of the national housing market in 2031. The most likely answer is messy. The country is not one market. Single-family starter homes in growing cities likely stay hard to find, while builders put up too many apartments in the Sunbelt where rents are already flattening. Balance in one place, a shortage in another, a surplus in a third.
Here is where the housing debate stops being interesting and starts being useful.
Do not build your future around a single prediction. Do not assume your house climbs 5 percent a year forever. Do not assume it crashes either. And do not assume today's shortage stays true simply because it is true today.
Which brings me back to my neighbor. His house value may keep going up. It may not. But even if it does, that equity is doing only one job, and it’s a slow one. It sits there and pays him nothing while he waits on a number he does not control. Your home equity is not a retirement plan. It is a lazy asset.
The better bet is to own something that does more than one job at a time. Buy a cash-flowing asset correctly and it can pay you rent today, build equity as the loan gets paid down, and rise with inflation as rents and replacement costs climb, all while maybe going up in value, too. None of that is guaranteed. Vacancies happen. Repairs happen. Taxes and insurance climb. But with investment property as well as your house, you are no longer banking your whole future on one line item going up.
That is the entire idea behind Asset Accelerator. I am not trying to guess what a house is worth in 2031. I am trying to take one dollar and give it several jobs. Cash flow. Equity. Inflation protection. A shot at appreciation. Then I use the cash flow and equity from the first asset to buy the next one.
Because if the shortage is real, I own an asset paying me in a tight market. If Zelman is right and housing loosens up, I still own an asset paying me. I do not have to win the prediction. I just have to own things that work under more than one future scenario.
My neighbor is betting the house on…well... the house. You can build something better than a bet.
You made the money. Now make it count.
Jim
About Asset Accelerator
I'm Jim Duffy. For 25 years I've sat across the closing table from families who looked successful on paper but just weren't building anything that would last. I started Asset Accelerator to change that, one reader at a time. My wife Lisa and I are walking this same road ourselves, from earning to owning, and every week I share what actually works. No hype, no gurus, just real numbers and the belief that it's never too late to start. Let's build something that pays you for life.
