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There's no real definition of what constitutes a bubble, so it's kind of pointless to discuss.
It is clear that housing makes up a bigger portion of most budgets today than a few decades ago. The first house I purchased, in 1992, has a Redfin estimate of more than 5x what I paid for it. The house we live in today is up almost 150% since we bought it in 2012. I'm sure most people here can cite similar stories.
Few other things we pay for have increased in price so much, outside of health care and college tuition.
There's no real definition of what constitutes a bubble, so it's kind of pointless to discuss.
It is clear that housing makes up a bigger portion of most budgets today than a few decades ago. The first house I purchased, in 1992, has a Redfin estimate of more than 5x what I paid for it. The house we live in today is up almost 150% since we bought it in 2012. I'm sure most people here can cite similar stories.
Few other things we pay for have increased in price so much, outside of health care and college tuition.
Florida was hit hard during the last housing crash. In 2013, my son scooped up a beachfront duplex in Florida for $167,000. After 5 years, without putting it on the market, he sold it for about $280,000. Its value is now up about 275% since his purchase.
There's no real definition of what constitutes a bubble, so it's kind of pointless to discuss.
It may be pointless to bang the drum, announcing some sudden enormous change. But if prices rise substantially year after year, only to eventually witness a cyclical change, then our fortunes will differ considerably, depending on when in the cycle we made our various decisions. The top of the cycle may (or may not) be a "bubble", but those who bought houses in 2012 did far better, than those who bought in 2007, and again, those who bought in 2019, are doing better, than those who bought last Tuesday.
From the perspective of an incipient buyer, who is currently a cash-flush renter, we may legitimately ask: is it better to pounce now, or to wait 2-3 years?
I just got a notice from a materials supplier. Sheetrock, cement board, and other construction material prices increasing 30 to 50% effective 5/4/22. This is nuts. So much for building back America. Between the material cost increases, increased borrowing costs, increased labor costs, increased fuel costs, increased equipment costs, etc., any major infrastructure program at this point will only worsen the problems and result in getting much less done for a lot more money.
It is highly unlikely that the Fed will be able to orchestrate a "soft landing." The Fed must bring down inflation as quickly as possible to quench the red-hot price increases in food, energy, materials, real estate, etc. Since real estate inventory coming to market is at record lows now is the time to institute these changes since prices for real estate are less likely to see the dramatic price declines they typically experience in the current environment than in a market flooded with inventory.
I just got a notice from a materials supplier. Sheetrock, cement board, and other construction material prices increasing 30 to 50% effective 5/4/22. This is nuts. So much for building back America. Between the material cost increases, increased borrowing costs, increased labor costs, increased fuel costs, increased equipment costs, etc., any major infrastructure program at this point will only worsen the problems and result in getting much less done for a lot more money.
It is highly unlikely that the Fed will be able to orchestrate a "soft landing." The Fed must bring down inflation as quickly as possible to quench the red-hot price increases in food, energy, materials, real estate, etc. Since real estate inventory coming to market is at record lows now is the time to institute these changes since prices for real estate are less likely to see the dramatic price declines they typically experience in the current environment than in a market flooded with inventory.
Now I know why the house down the block from me (modest 5/3 3K sq feet) is being listed just shy of $1 million.
It may be pointless to bang the drum, announcing some sudden enormous change. But if prices rise substantially year after year, only to eventually witness a cyclical change, then our fortunes will differ considerably, depending on when in the cycle we made our various decisions. The top of the cycle may (or may not) be a "bubble", but those who bought houses in 2012 did far better, than those who bought in 2007, and again, those who bought in 2019, are doing better, than those who bought last Tuesday.
From the perspective of an incipient buyer, who is currently a cash-flush renter, we may legitimately ask: is it better to pounce now, or to wait 2-3 years?
I've always just bought a house when I needed one. I rented until I was 29, and then have been a homeowner ever since. Thankfully I've always been able to live in cities with moderate housing costs.
I can say that I'm glad I'm not in the market for a house today. I might just carry on renting at the moment if I were a first-time homebuyer right now. Inventory is slim and competition is fierce. Buying a house is stressful enough in an average market, but today I think it would be a maddening experience.
I just got a notice from a materials supplier. Sheetrock, cement board, and other construction material prices increasing 30 to 50% effective 5/4/22. This is nuts. So much for building back America. Between the material cost increases, increased borrowing costs, increased labor costs, increased fuel costs, increased equipment costs, etc., any major infrastructure program at this point will only worsen the problems and result in getting much less done for a lot more money.
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Exactly. With material costs to build a home up 50% its almost impossible for prices to crash just due to inflation alone.
Over the past 12 months lumber futures have traded between about 450 and 1700. Currently it's at about 950. Looking at the 25-year chart, pre-pandemic lumber traded between about 150 and 600, and it's hardly a straight line up and to the right.
In most expansions the housing stock gets overbuilt, at least regionally. Whenever this one ends, I expect lumber will be much lower than today's quote.
Over the past 12 months lumber futures have traded between about 450 and 1700. Currently it's at about 950. Looking at the 25-year chart, pre-pandemic lumber traded between about 150 and 600, and it's hardly a straight line up and to the right.
In most expansions the housing stock gets overbuilt, at least regionally. Whenever this one ends, I expect lumber will be much lower than today's quote.
We have very few new homes being built in central CT. The available land near where people want to live is in short supply. In my neighborhood the only available land is right next to the interstate. The new houses being built there are 2300 sq ft and start at around $500k. That is insane as existing homes, in better locations, are $250 to $325k.
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