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Thanks for the post!
Interesting to see how the housing market is doing.
Is it artificial low supply, so high demand? Since many laws were implemented to hault building new working class homes in most dense populated areas, or I am just wrong and don't know too much?
No, that's pretty accurate. There is new construction, but not nearly enough, and more importantly not dense enough to satisfy demand.
People still want to live in cities, but often denser buildings are blocked. And people that want to live in suburban areas can't afford the homes being built.
People who want to live in rural areas are fine, because the demand for those homes is so low. Not many people want to live in bumfuck Ohio.
Thank you for taking the time to explain!
Seems cash is becoming king again?
This is about existing home sales. From what I can tell (on very limited information) new home sales are still at normal levels. People who don't have a house are buying a new one, as are people looking to upgrade.
I work with a lot of tech directly related to the mortgage industry, and it's kind of crazy to look at the data. Mortgage originations plummeted as interest rates rose (less people buying houses) but new construction - especially on lots that had been cleared but had been sitting undeveloped for several years - exploded in a rush, and it's not clear why.
I've been through previous mortgage corrections and this one is pretty tame by comparison to some others - the hard part about buying a house is that prices will rise for years upon years and waiting for a correction seems risky when you see prices rising out of your affordability. But in the past, it has always been true that the market will level out over time.
I'm guessing a lot of that are townhomes built on old cleared lots. The supply of affordable SFH in a lot of cities is pretty slim but these townhouses are going up all over the place and you can fit 4-6 of them on the same lot some old run down 1950s house used to occupy.
Thank you for the input!
That’s not how supply and demand work. Low supply doesn’t drive demand higher; demand is usually independent of the supply. However low supply for any given demand will cause prices to increase.
And what makes you think the supply “artificially” low? There’s not a big conglomerate somewhere holding on to a large enough tranche of housing to cause a dip in supply, most likely.
It’s low supply because homeowners with record-low interest rates are less interested in selling and moving, since the monthly payment they pay right now be for less house. It’s a side-effect (or maybe the main effect? I’m not an economist) of the fed increases.
I think they're referring more to artificial restrictions like single-family zoning, setback requirements, parking minimums, etc.
https://www.nytimes.com/interactive/2016/05/19/upshot/forty-percent-of-manhattans-buildings-could-not-be-built-today.html
To take Manhattan as an example, 40% of the buildings could not be legally built today because they would violate zoning laws. A huge amount of San Francisco is under single-family zoning, and so low density - and given fixed land, low supply - is artificially enforced, which probably has something to do with it being one of the most expensive housing markets in the country.
edit: removed off topic, added blackrock conspiracy video
Thanks for the input!
I have heard of companies buying up 'would be first time buyer' homes and renting them out.
Similar to this moderate random video on subject:
Why Wall Street Is Buying So Many U.S. Homes [12:33 | CNBC] https://www.youtube.com/watch?v=iLsZlrZIFwU
The Blackrock Conspiracy Debunked [20:54 | The Hated One] https://www.youtube.com/watch?v=STYgeA9VScc