This newsletter has been reiterating one observation for a few years: the supply of U.S. housing is low. It's low relative to (a) history, (b) current demand, and (c) increasing future demand predicted by the rates of birth, immigration, and the huge percentage of Millennials living with their parents.
This week brought news of just how serious this matter has become: the U.S. housing supply now stands at a 17 year low. There are 1.65 million homes on market, the lowest since 1999.
As reported in this newsletter previously, the pace of homebuilding remains under trend, as builders face shortages of labor and land. 
If interest rates rise substantially over the next year, that will let some of the steam out of demand. However we are so far below trend, that a significant drop in demand will just put us back to equilibrium. The latest numbers suggest the current deficit is 400,000 housing units per year.
Given the most recent month of sales -- down 2.8% nationally, as many buyers simply can't find a suitable home -- the current inventory will be absorbed in just 3.9 months. This is the lowest number since January 2005. That would be an ominous statistic except now is a mirror image of 2005 -- back then, high demand was driving this ratio, and now it's being driven by lack of supply.
The Dow Jones Industrial Average hit 20,000 this week. This is particularly interesting because it first hit 10,000 in 1999 -- coincidentally the same year our housing inventory was this low.
As Mark Twain wrote, "History doesn't repeat itself, but it often rhymes."
This newsletter was early calling the stock market bubble last year, and just as in 1999, conservative people will look foolish for a while -- until they look smart.
The best illustration I can provide to prove that the stock market is massively overvalued is the chart below from the Federal Reserve Bank of St. Louis.
Note that the ratio of the Wilshire 5000 to Gross Domestic Product peaked at just below 1.18 in Q1 2000 before the bubble burst. We are now at 1.39, totally unprecedented territory.
Here's what's really scary: the current valuation is up almost 40% from the peak of the stock market in 2007 -- from the peak!
The bottom line is now would be a wonderful time to sell stocks. You may witness the market continuing to rise, but it's better to miss out on some of the upside than get crushed on the downside. Nobody ever went broke taking a profit.
It took 17 years to go from Dow 10,000 to Dow 20,000. That's a long time to double one's money. The cash flow and appreciation on just about any type of real estate anywhere in the country beat that, and with a lot less heartburn.