Read on Twitter
Good thread talking about why houses are WAY too expensive right now. I'll do a quick explanation thread in case anyone's curious why this is happening. https://twitter.com/EricaHayes87/status/1381462324842692609
Many stars aligning for this:
1. The 2008 recession destroyed a lot of home builders. New constructions never recovered and there is over a decade of new construction deficit.
1st chart - You want the green line above the blue line.
2nd chart - Single Family homes WAY too low.
1. The 2008 recession destroyed a lot of home builders. New constructions never recovered and there is over a decade of new construction deficit.
1st chart - You want the green line above the blue line.
2nd chart - Single Family homes WAY too low.
2. Key home-buying demographics are growing over the next decade. There's a surge of first time home buyers in that 30-40 year old bucket and then aging baby boomers that want to down size to homes with easier maintenance.
3. Remember Trump's trade war? Elections have consequences.
"The U.S. tariffs and other trade measures currently restrict the supply of almost everything you need to build a house, from the foundation to the roof and in between." https://www.cato.org/blog/how-us-trade-policy-contributes-our-insane-construction-materials-costs
"The U.S. tariffs and other trade measures currently restrict the supply of almost everything you need to build a house, from the foundation to the roof and in between." https://www.cato.org/blog/how-us-trade-policy-contributes-our-insane-construction-materials-costs
4. Covid. Normally, some foreclosures would be re-entering into the market as available housing. FHFA extended eviction Moratoriums until June 30th. Good for fighting the pandemic, bad for buying a new house.
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-COVID-19-Forbearance-Period-and-Foreclosure-and-REO-Eviction-Moratoriums.aspx#:~:text=FHFA%20announced%20that%20Fannie%20Mae,%2C%20single%2Dfamily%20mortgages%20only.
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Extends-COVID-19-Forbearance-Period-and-Foreclosure-and-REO-Eviction-Moratoriums.aspx#:~:text=FHFA%20announced%20that%20Fannie%20Mae,%2C%20single%2Dfamily%20mortgages%20only.
5. More Covid. Potential home sellers are hesitant to have a bunch of strangers walk through their homes during the height of a deadly respiratory pandemic. Less selling going on despite innovation with things like virtual walk throughs and drive by appraisals.
6. Antiquated building industry. The same techniques for building a house from almost a century ago are widely used today. Lots of wasteful spending caught in these methods. Room for new tech to come in and shake things up.
There's more, but those are the BIG drivers. Lots of demand, not a lot of supply, and everything costs more. Should get a little better after we get Covid under control, but there are still many factors driving housing prices up. At least mortgage rates are low!
