"... and bidding up prices wherever they land.... When people leave multimillion-dollar houses in, say, Los Angeles to plunk down $1 million on a house [in Texas or Idaho] that was worth $500,000 a year ago, they turn a merely frenzied housing market into a once-in-history, hair-on-fire, what-the-hell-is-happening bonanza. Supply issues are just as important. Years of insufficient building and a construction pause during the pandemic have led to low inventory. Seniors, who in previous decades sold their homes to downsize, are now more likely to 'age in place,' which is keeping millions of homes off the market. Plus, some builders are putting their projects on hold because of the sudden tripling of lumber prices, which could delay the construction boom this country so badly needs...."
From "Why You Should Wait Out the Wild Housing Market/Rising inventory is one of several signs that we may have reached peak ludicrousness" (The Atlantic).
Posts
3 comments:
Kylos writes: "I recently talked with my brother who works in real estate in Grand Rapids Michigan. He informed me that across the state there’s an extremely large number of residences that are behind on mortgages. Once government-authorized forbearance expires at the end of June, housing supply could be set for a dramatic increase."
dwshelf offers a dire prediction:
I observe the collapse of the $US. Slowly at first, and then suddenly.
Current buyers who get a long term mortgage at 3% will end up getting a house nearly for free. They're the smart ones. Five years hence they could be making their mortgage payment on a single hour's pay.
Ray SoCal writes:
In Southern California, what is super hot housing is what is considered affordable, anything under a million per a West Hollywood broker on a recent webinar. He said the average house is on the market for only 3 days. He also mentioned that buyers are in better financial shape, having more of a down payment, and getting fixed interest loans. None of the variable rate interest loans with zero down, that devastated so many first time lower income buyers last bubble collapse, this time. I am also seeing institutions buy houses, to turn them into rentals. Chinese money has dried up for the moment.
A factor not mentioned in the article is the rise of remote working, and the increase in crime in urban centers. With an increase in remote working, people want a bigger house that includes a home office. And with working remote, you no longer need to work in a city center. In the Los Angeles Area, the downtown area is full of homeless and graffiti. In Venice Beach, due to the increase in Homeless per a Daily Mail Article, prices have actually fallen. In California, it's very hard to build anything. A joke a housing forecaster / investor made was in Texas, you think of a year ahead. In California, you think 15 years. This is how long for larger housing tracts it takes to get all the necessary permissions to start building. Due to the added costs, what gets built is higher end houses. There are lots of CA requirements, such as solar ready, that add to the cost of a new house.
Post a Comment