Strategic Investment Group

Housing Economy: Pause or Precipice?

September 2006

In 2005, the value of housing owned by U.S. households totaled $21.6 trillion, of which over $5 trillion was accumulated over this past appreciation cycle. With signs of weakness in home sales and prices increasing, many observers are wondering whether the current setback is a brief pause or a warning sign that we are teetering on the precipice of significant declines in property values.

Several factors have led to the overvaluation of housing. Population growth, rising per capita incomes and the increasing trend toward two-income households have stimulated demand. People have opted for more spacious
first and then second homes. An increased appetite for location options to support mobile lifestyles has partially offset the trend toward smaller families. Tax deductibility of mortgage interest expense has supported housing prices by lowering financing costs.

< Next

Previous Brief >

| Privacy Policy

| Site Map

| Client Login

Strategic Investment Group Home | Portfolio Management Solutions | Asset Allocation | Contact Strategic Investment Group

® A registered service mark for affiliated investment managers: Strategic Investment Partners, Inc.; Strategic Investment Management, L.P.

Nothing on this site should be considered a solicitation to buy or an offer to sell shares of any Strategic product in any jurisdiction where the offer or

solicitation would be unlawful under the securities law of such jurisdiction.