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I keep hearing people talk about the housing supply, well the other part of that is the demand. Inflation is about to hit 10%, the average American is forking over $276 more a month due to inflation compared to a year ago, that number is probably closer to $300 since everything with Russia started and oil spiked.
Student loans payments are restarting in May for over 40 million Americans and the fed is still planning on raising rates.
Just because it's not the same as 2008 doesn't mean we couldn't see a bubble pop for other reasons. The second the demand dries up because nobody can afford these prices you'll see the bubble pop. Then people will sit on the sidelines waiting to see how low prices will go which will only drive prices down further. In 2008 people got into mortgages they really couldn't afford. Now people got mortgages they could afford but now the world around them is making everything unaffordable.
I don't think the bubble HAS to pop, it could just deflate a bit.
Honestly, I was surprised to see the housing market boom during a pandemic, but I am horrible at predicting economic issues.
Just got to wait and see what happens.
For us, the main inflation hit is gas, diesel and propane. We just adjust our food consumption to be less of a hit, and don't buy things that have gone up a lot. We always have tons of food, so I am eating more from our existing stock. Instead of running the heater, we run the pellet stove. So far it's been easy to adjust so our expenses don't go up much.
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Location: IN>Germany>ND>OH>TX>CA>Currently NoVa and a Vacation Lake House in PA
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LOL...these prices are not going anywhere but up. Inflation is rampant as you describe, right? Now, take that inflation, go to Lowes, and get building supplies. Do you not realize how expensive it is to build a house right now? Just to build a deck costs a small fortune.
Now consider that rental rates are actually outpacing the housing market as well. People need to live somewhere. IMHO, buying a house now is even more important to middle class Americans as we've seen rental rates go completely insane. Those rising rental rates have brought in investors into the housing market in record numbers who are happy to rent a home to people for big money. As interest rates continue to rise, so will rents.
Apples and oranges from 2008.
Last edited by LakeLifePA; 03-02-2022 at 10:00 AM..
For the most part, I agree with Robert20170. I don't think prices are going anywhere but up.
First, student loans will have little impact since this these are not the people buying houses right now.
Secondly, interest rates will have little if any impact since many are cash buyers. The ones that are not cash buyers, will still want to buy because it is probably cheaper than what they are paying for rent.
Third, investors will continue to flock into these sweet deals, especially with the 100% bonus depreciation started with the 2017 tax cuts and jobs act. That will expire in December, but by then, investors will own so many homes-turned-rentals, I am not sure it will matter.
I don't think the bubble HAS to pop, it could just deflate a bit.
Honestly, I was surprised to see the housing market boom during a pandemic, but I am horrible at predicting economic issues.
...
You, me, and many others thougt the same thing.
Ultimately, until something lowers demand there will be no pop or even deflation. Areas growing will continue have increases. Areas with declining populations will eventually have to see an adjustment downward once popluation and home inventory even out. We just have so many more people now and not enough housing as a country. I think a WF report estimated the country needs an additional 4,000,000 homes based on population counts.
I must agree with this. Back then the issue was that lenders were writing loans to anybody with a pulse (sometimes without one), even when many of those buyers couldn't afford to make payments they were signing up for. This was poor management of those institutions and a lack of strict regulations. There was no accountability due to their greed and carelessness which led to that crash. I don't see that happening again with the newer regulations.
Then again, who can accurately predict these trends 100% of the time? Please folks, enough with the doom and gloom predictions about something that hasn't happened. We have learned that a "lasissez faire" approach doesn't always work, but we try to learn from our mistakes.
Ultimately, until something lowers demand there will be no pop or even deflation. Areas growing will continue have increases. Areas with declining populations will eventually have to see an adjustment downward once popluation and home inventory even out. We just have so many more people now and not enough housing as a country. I think a WF report estimated the country needs an additional 4,000,000 homes based on population counts.
I saw some numbers a while ago on how many homes were being built in the 2000s and how are being built now, and it was a significant reduction.
I would love to see production of smaller, starter homes and such but I'm sure there are draw backs to building smaller for contractors.
I don't feel housing should be so out of reach for people.
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It is binary thinking. The reality is there are multiple variables impacting supply and demand for housing. Here are a few:
Inflation
Supply chain disruption
Pent up pandemic demand
Changes in demand due to more people being able to work from home
Retirement of baby boomers
Mortgage rates
Region-related impacts (is the local economy expanding or shrinking)
Commodity prices
Wages and general labor availability
I keep hearing people talk about the housing supply, well the other part of that is the demand. Inflation is about to hit 10%, the average American is forking over $276 more a month due to inflation compared to a year ago, that number is probably closer to $300 since everything with Russia started and oil spiked.
Student loans payments are restarting in May for over 40 million Americans and the fed is still planning on raising rates.
Just because it's not the same as 2008 doesn't mean we couldn't see a bubble pop for other reasons. The second the demand dries up because nobody can afford these prices you'll see the bubble pop. Then people will sit on the sidelines waiting to see how low prices will go which will only drive prices down further. In 2008 people got into mortgages they really couldn't afford. Now people got mortgages they could afford but now the world around them is making everything unaffordable.
That's the thing...they can raise rates and slowly deflate the bubble...without causing a collapse.
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