Yeah. I see a ton of private equity getting into pre-fab homes over the last couple years. It seems to be the market du jour for them.
No. The topic is high prices. The topic is not about a housing bubble. Prices may fall with economic changes but that is a normal response. No one is talking about a bubble.
The high prices are the bubble. It wasn't a gradual growth in prices, it was a doubling/tripling that happened over the course of 2 years with no real fundamentals to back it up other than too low interest rates, irrational exuberance, and speculation.
After we sell, that's all we are doing is renting. Too much travel and poss a dabble into expat life to own.
Unlike the 2000s, a lot of the demand this time was real. Yes there was speculation by corporate buyers, but there was also need for more space due to remote work, millennials entering the market in huge numbers, migration due to remote work. Add low supply, large cash reserves, and historically low interest rates, and boom: crazy market inflation. The scary part is there’s still a lot of pent up demand. If rates go back into the 5s, you will see another run. I don’t expect a major market correction. But I do believe you will see growing numbers of foreclosures due to cost of living, and out of control insurance cost (at least in FL).
Have you seen the cost of renting though? I see 3/2s in my neck of the woods for 3.5-5k. If you want a bigger house it’s 4-7k. No good options.
The demand in the 2000’s was real as well. You can’t dismiss the demand of the early 2000’s because you didn’t like the reasons why the demand existed. Just like the current bubble, demand increased (for whatever reasons) and we have a crisis. Demand is always “pent up”, but it has limits. If you drop the price of every house to $1, demand will go up and every single house would be bought. 100% of inventory gone. If you raise the price of every home to $1B, they will all sit. You can’t just say demand is pent up, as if buyers will buy no matter what. There are limits. I believe we reached the peak in 2022, but I do not have crystal ball and concede that you may end up being right about this.
“Supply” as you are using it is a philosophical metric that is inversely related to demand. There is plenty of supply, but the list prices and interest rates have cooled demand. It’s a two-way street, and supply does not rule demand anymore than demand rules supply.
You are on an island on this subject. I assume it’s because you want a house at a lower price. Not sure. Prices have not doubled or tripled over 2 years and every industry expert is telling you the fundamentals support ongoing high prices. Other than not liking the prices you really haven’t offered much in the way to support your outlier position that we are in a bubble. Don’t you think if you’re out on a limb you should at least support your position somehow? With something? Other than when you look at a house you don’t like the price?
Quantity demanded for housing is a function of household formation and interest in investment income via the long-term or short-term rental markets. One of those factors, the investment income option, is relatively elastic while the other is inelastic, as families need a place to live. Quantity supplied is based on houses started minus houses destroyed or moved into the short-term rental market. As of now, the new housing starts aren't even matching household formation. If you add in the other factors, where housing is moving into the short-term rental market (which has happened extensively in the world of AirBnB) and houses that aren't habitable for some reason, there is a pretty massive shortage of housing.
Ok, so you mean to tell me that in 2019, we had enough houses, but all of a sudden in 2020, we had no houses anymore, and that caused the run up? Housing supply wasn’t enough overnight?
There has been a shortage developing since about 2010. As millennials and then Gen Z formed households, they largely were presented with a market that wasn't starting houses at the rate that they were entering the market. And there were more households entering the market, due to household formation and immigration, than there were people leaving, largely due to emigration and death. Thus, why you saw a huge increase in cohabitation.
The reason the prices shot up was the low interest rate. Money was cheap to borrow, which meant buyers could throw around huge offers with escalation clauses to outbid each other. People who normally could only afford a $400k house were able to borrow enough for an $800k house. It was a frenzy. I had no idea it was that bad until I sold my house and buyers were going nuts to overpay me. I didn’t even list it at the top price I could have. Unlike what @citygator suggested, I am not lacking of resources. I was turned off by the process of selling my house and wanted no part in bidding wars. The climate has completely changed since then. Realtors wouldn’t return calls back then. Now, they hit you up asking if you are interested. Price reductions everywhere. I see much more reasonable listing prices now, but see no need to jump and make offers as the prices continue to fall.
That’s not a bad idea. Is the reason you’re planning to rent more related to your desire to move around or due to the housing prices? Seems to me like you are prioritizing living your best life. Happy for you, my fellow veteran!
Not housing prices. I think I know where we want to live but not positive. Mostly moving because it is much easier to travel for extended periods. Doing at least two European trips and one extended trip across the pacific this year. Also don't need a large house and associated work/maintenance with the boys gone. Neither will live in GA after grad.
House prices are down a bit, but still very high. Both things can be true. There can be both a shortage and a buying frenzy based on low interest rates (which can be exacerbated by the perception of future increases in interest rates and a shortage of units, which can cause a more extreme buying frenzy).
