Financial literacy gained at YEN-gura’s Investment University (Academia) | Episode 12 [YEN-kura]

YEN Kura-san Profile

Enzō. He has worked for over 20 years as a foreign exchange dealer at American Citibank, the British Standard Chartered Bank, and other foreign banks. Currently a top professional trader, he conducts trading in forex, the Nikkei 225, Nikkei options, and individual stocks. He is the representative director of ADVANCE Inc., which mainly distributes investment information. He has deep knowledge not only of major currencies such as the dollar and euro but also of emerging currencies, including Asian currencies, in trading. He also has close relationships with overseas traders and fund-related individuals.

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*This article is a reproduction and editing of an article from FX Strategies Magazine January 2021. Please note that the market information written in the text may differ from the current market.

U.S. Housing Market

The U.S. gross domestic product (GDP) statistics include several components. The largest weight is personal consumption, accounting for about 70% of U.S. GDP. The next largest weights are government spending at about 17%, equipment investment at about 13.5%, net exports (exports minus imports) at −3%, and housing investment at 4%.

Among these, housing investment is a highly correlated investment with durable consumer goods excluding passenger cars. The housing market cycles with the economy. When a recession occurs, policy interest rates are lowered, causing long-term interest rates to fall and mortgage rates to decline. As a result, buying a home becomes more advantageous than renting, increasing the number of people considering home purchases. Housing developers know this, so housing supply increases. When the number of housing starts and housing permits rises, orders for housing materials such as lumber, bricks, cement, and piping increase, benefiting many industries. This cycle repeats.

As prosperity continues, interest rates rise, and housing prices rise, eventually leading to a decrease in housing construction. For Americans, owning a home is a dream and a kind of American Dream, but it is expensive and not easily within reach. The United States has several housing-related indicators. This time we introduce the framework of U.S. housing.