Yeah, and there's a great way to initiate a listing shortage... a foreclosure and eviction moratorium... I bought a bank-owned foreclosure in 2012, so what do I know... if I'd put the same money into BTC, I'd be richer than cheesecake extract...
@@ReventureConsulting second home buyers or people outside the city (even country) can mess up prices even if the population growth is lower than construction growth.
@@ReventureConsulting a lot less hassle with renting, and often better value. Most people don't understand comparing a monthly rental payment to a monthly mortgage payment is not an apples to apples comparison.
@@bccsivxx-xxivvii true,its all the same honestly.You are a renter either way.Rent from a landlord that is renting from the government or rent from the government directly being as you never really own where the property.
@@trevishornsby7385 good point. If I did buy a house to live in, depending on the property tax exemptions for homestead, I may own the home in a separate entity like an LLC and rent it to myself, especially if it needed work. You can also add bank to your statement, bank/government.
@@bccsivxx-xxivvii true,i really like the LLC approach,i think of it as a recycle method where as all the payments,upkeep,an tax benefits are washed thru the company.Own nothing but control everything.lol
@@SignalCorps1 Margins yes, demand... that's unproven. There are quite a few large homes here in Seattle sitting empty while affordable single-family homes are snapped up upon listing.
@@SignalCorps1 I don’t see any demand for luxury housing here. And I am in one of the best neighborhoods in PA. Lots of luxury house listings are sitting here for months, whereat standard homes get multiple offers the next day.
Permitting is expensive and zoning laws prevent multifamily residences. Permit costs are the same if you are building a small home or large home so it is cheaper per square foot to build a larger home due to spreading out the permit cost over a larger square footage. The permit process incentivizes luxury homes. The most affordable way to live near city centers is multifamily residences such as condominiums, town homes, and duplexes. However many cities have zoned land to prevent multifamily homes. The problem is a majority of families own their home in the US so they want to protect the value of their home. Those home owners don't want multi family residents built next to them that could harm their home value. Home owners also don't want home prices to go down due to over production of houses and want less houses and only nicer homes built next to them. Thus they vote for strick zoning and permitting that forces luxury homes.
Try,athe rates will continue to decline untill funds an Banks grab all the property the wish to an indebt you on what's left,them state where running to hot an spike the rates an further more price the average person out.either way they win an we lose with the slight of hand tricks
Bluegoka - you're not focusing on the bigger picture. Interest rates have been an issue for 20 years, but it did not create this newest bubble, although it is a factor. Money printing is not the issue as the money released in the past year is very small compared to the amount of outstanding money already in existence. The crux of the issue is currently investors looking for safe havens and higher returns that they feel they can get through bonds or equities. The truth is they are bidding up the price of a historically stable commodity just when that commodity is about to take a 20 year dive. Look (partially) to 1990's Japan for how the aging population directly stifles an economy.
I decided to step away from this feeding frenzy. Its out of control, prices are 75,000 to 100,000 over what they were just last year in my area. I've worked hard to get my down-payment just to be priced out the marked.
True - in many cases there is no housing shortage. There’s a proliferation of anti-market practices like mortgages whose terms penalize lowering rent to market-rates, unlimited infusions of foreign investment to squat empty units, and a refusal of politicians to tax vacant units allowing for 70% occupancy rates to be viable.
Good point Tay! Some states are starting to charge higher property tax rates on non-owner occupied units (SC for instance, where taxes are 50% higher if it's an investment property). Hoping to see more of this.
There are no residential loans that penalize lowering rent, maybe commercial but I doubt it. Most people with invest properties pay at least 1% higher on their interest rate and need the rental income to qualify. Raising property taxes on investment properties is horrible idea. That expense would immediately be passed on to the consumer. Pushing rent up before it forced the middle class that invested in housing to sell to investment group that can afford it. Then when a pipe bursts you won't be calling Mr and Mrs whatever around the corner you'll be calling Amazon investments
I live in Salt Lake City. None of these considerations seem to be affecting the market yet. It took quite awhile for housing prices to hit bottom last crash. As a seller, what should I consider my timeline to be? Do you think things are pretty safe until the end of 2021?
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed...
There is something deeply weird going on in the housing market prices, and I'm not sure this really covers all of it. The first anomaly is that housing prices are rising despite what should be an economic downturn. The second is that housing prices are rising virtually worldwide - not just in a few cities in the USA, and even in the USA, the price rises are widespread rather than localized. Theoretically if population is stable, average house age of 25 years (ish) before demolition means that you'd need to replace about 4% of US houses every year. That should theoretically drive the demand side. Technically though, in wealthier times, people want more cabins and second houses; and since the mid 20th century, higher divorce and lower marriage rates (and smaller families) have also effectively meant that people want more houses per person than was previously the case. Immigration (legal and illegal) also adds to the demand side. What's weird though is that MOST of these people need low-end, cheap housing (young adults, divorcees, immigrants), and that is NOT being supplied by the market. The declining US demographics are a worldwide phenomenon, and yet housing prices are not being affected YET. Retirees want to stay in their own house as long as possible (understandably), meaning that there is no room in the suburbs for young families with kids. This pushes up prices in city centers (where those people hope to find work), and on the distant city fringes (where long they trade slightly cheaper house prices for long commutes). Regular suburban houses will eventually go on the market, but with a 10-15-year delay, after retirees actually die and their kids decide if they still want to keep the old family home in the family or not.
The world is printing money at an unprecedented rate, causing commodities to rise to levels never seen before, i.e., copper highest I have ever seen, wood is the highest I have ever seen, and this goes on and on. There is a tremendous wealth disparity, and the millennials have larger families than the GenXer's who are now looking for housing. When lumber collapses, housing will collapse soon after as 30 to 50 percent of the increase absorbed in material costs of new homes is instantly destroyed.
Easily explained. Hyperinflation when us dollar is still the world reserve. Prices are going up but the value of each dollar in that price is worth less. The only way demand is even alive is gov backed mortgages at fake under inflation rate of say libor +3 max. Real inflation is way higher than they want us to believe to keep consumer confidence up. Interest rates have been artificially kept at nearly zero since 2008. When the poor (aka those that don't have 20% dp) can't make thier payment on even 2.6% 30 year mtg shits going to get real.
@@apersonontheinternet8006 true. I'm sure that most US houses are a lot older than that, on average. It just feels that they have a shorter average lifespan in the west coast city that I live in. Woodframe houses should be good for 40 years or more (much longer in Europe of course), but in an era of strongly rising property values, anything that is 20 or more years old is seen as a teardown; not big enough to justify the price paid.
Airbnb Hasn’t been mentioned yet… Around the world homes have been snatched up as “investments” but not to rent, to make them into vacation rentals. That created a shortage in my town, doubling rent prices + forcing families and workers out. But it’s a nice enough area that people from California will come in and pay way over asking price for whatever is left 🥴 And it’s not just the US, this is affecting all major hubs/ housing markets.
This presentation was phenomenal! I've just started watching your videos. I subscribed when I saw my 1st one. You're opening my eyes to data in a whole new way that isn't overwhelming. Thank you.
There is most definitely a shortage. Demand doesn't just come from domestic single family home owners. You have domestic and international investors as well as international buyers looking for vacation homes, second homes, etc...The demand, for a multitude of factors, is through the roof. Most of the videos I've watched do acknowledge demand and supply, they just don't peg demand to overall population growth, because that's not the driver. When it comes to construction the numbers are a lot worse than just new permits or starts suggest. If a foundation is laid it's considered a start. The problem with that right now is that their are many projects that haven't and may never get past that point. The rise in material and lumber prices has grinded a lot of it to a halt. I work in a rural market as a mortgage banker. Already I've had general contractors tell me they are looking at other lines of work because it's gotten so bad. What a lot of people don't understand about most construction loans is that if costs go up in the middle of projects the borrower has to figure out how to make up the shortage to keep the project going. If they can't the project does not continue. Overages are common, overages of the sizes we are seeing are not normal and the borrowers are getting absolutely crushed right now. That also impacts the general contractors. Applications have dropped 3 months in a row and interest rates are still at historic lows. The minute the Fed decides to raise the rates the impact on the US housing market will be dramatic. What you show with population combined with what we've had with historic low rates for a huge amount of time should be setting off alarm bells for everyone when it comes to the future of the housing market. People that are buying homes and staying long term will never get a rate in the future that will make mathematic sense to refinance. People that refinanced over the last year will be in the same boat. This will also have an impact on the amount of people that would have otherwise decided to upgrade or move. The rates will most likely be high enough that many people won't leave their situation. The long term impact of the low rates and historic refinancing and purchasing numbers are impossible to tell, but it's not good.
Ultimately the fundamental demand for homes is determined by population growth (job growth is another good metric). Investor demand is fickle. It comes. And then it goes. And when it goes it brings the market down.
@@ReventureConsulting Which is why long term you're correct. In the short term, as of today, there is a legitimate shortage of inventory. There has been for quite some time now. Depending on what the CFPB does with forbearance that could seriously impact future predicted inventories. Cost of lumber and materials is already starting to impact new construction. Long term I think inventory will skyrocket. I don't see that happening in the next few months. Redfins market data is a good resource. New listings peak this exact time of the year and we are off pace from 2017 through 2019 levels. I'd also point out it's hard to say how fickle investor purchasing is when it's been on the rise by percentage for over 20 years. That's a long term trend. .
international (e.g. Chinese) and domestic "big boy" investors warping markets everywhere. They are the ones coming in with cash over list price and forcing out those of us who just want a place to live. Make a law that anyone who buys a home has to live in it for at least a year. And make foreign investment illegal. Only LEGAL U.S. citizens should be able to buy.
This data is very useful, but it's not the entire picture. You also need to look at the existing inventory, which is always in a state of decline. Also, you need to account for the migration of the population. For example, people leaving Detroit for Austin or Atlanta will have an impact on all those markets.
I love a good video that confirms my bias! It feels great, but it doesn't give you nuance. This is not a conspiracy theory. The conspiracy is national and international investors buying all our homes. It's BS. They should be TAXED heavily on investment properties. Banks should be given a vacancy tax on their homes just sitting around.
I am an Economics Professor and I love hearing sound research. You did a great job, bravo my hats off to you. I live in Boston a so-called HOT market and we are starting to see prices drop on the outskirts of the county and in the city.
@@ReventureConsulting One thing I will love to see is how people owning 2-3 homes play into this. Part of the reason we are not seeing homes coming to the market is because people are holding their second and third home in the hope of using it to generate airbnb income. Also, how is inflation and the dollar losing it's value play in this?
The term " Housing Shortage " does not only apply to actual houses it also applies to apartments. As for apartments there is no shortage of empty apartments in the Chicago area. The company I worked for put up over 2000 units in the past 3 - 4 years and the sad thing is most of them are lucky to be half full. And just like in 07/08 prices are going to tumble it's just a matter of time.
Here in Orange County , CA rents are skyrocketing while thousands of apartments sit vacant. Perhaps landlords don’t want to be stuck with non paying tenants for years?
I PRAY THERE IS A "CRASH" soon, we have looked at 8 homes in 5 weeks, making an offer at each, the offers 100% the asking price which we know are inflated and we lost ALL EIGHT! The most recent, June 1st, asking 289,900, we made a full asking offer, the home sold for 344k. I spoke with my lender and he said: "Consider taking a step back, this is going to end badly and there are going to be a pile of people upside down in their new home and that's a bad financial decision". When your lender offers advice in your favor, TAKE IT! IM OUT for at least two more years, I own my current home free and clear, we can wait.
Wait till the freeze on foreclosure/eviction is over then about 3 months after that the prices will fall when the homes hit the market. Only issue about waiting is the climbing rate of inflation.
My wife and I also been looking at a lot of homes lately. The scariest part is that 90% of offers are waiving the inspection (according to my realtor lol). Even if you willing to drop a lot of money can't beat ppl willing to risk everything
Wow - that's a crazy story! Also - waving the inspection is nuts. Wonder what those people will do when prices start falling and they realize there's $15k of deferred maintenance in their house.
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed...
Well, thats pretty nice of you... Lets hope it crashes so others who have invested in their homes lose that equity and possibly go underwater. While there are some who have been reckless, this isnt much different than wishing illness on someone.
Why do you have to buy a house with crazy high prices? Even though the rate is low. You pay even more than the high rate with 30 years. It will be crash because many people cannot afford their payments. Just wait
1. Baby Boomers are not the largest generation, millennials are. 2. Millennial are at the prime home buying age...and are the largest generation increasing demand 3. Generation X is only very slightly smaller in size than Baby Boomers and are at prime age for downsizing/buying retirement homes (aka increased demand) 4. Population growth over the past 20 years is a poor metric for measuring housing demand in current time. How many 20 year olds do you know thinking to buy a house? Not many right? 5. Permitted homes does not equal built homes. 6. No where in here does it account for homes that are unlivable/torn down There is a lot in this video that just simply doesn't apply to your thesis...at least not in the short time frame (~5 years from now). In addition to that there are many facts that are ignored that point to the opposite. No disrespect but there is a lot of confirmation bias going on here. I'd be more worried about a stock market crash dragging the housing market down with it over a housing bubble, and it's not even close.
Millennials **recently** surpassed Baby Boomers as the biggest group (2019). I think "this guy" is saying that baby boomers are dying out, ergo, their numbers decrease.
@@Samantha30090 we've been the biggest group for decades.... we are about to have 40 year old millennials. We aren't the biggest group because boomers are dying, we are the biggest group just because there have been more of us since the 90s.
@@amyl3729 Share your statistics, please, because "millennials have NOT always been the largest generation. Key words "not always". “This year, Millennials will overtake Baby Boomers.” It was updated April 25, 2016, to reflect the changing population, under the headline “Millennials overtake Baby Boomers as America's largest generation” I suppose critical thinking isn't your forte', Amy. Now, be a good girl and pull your claws back in. Surely you must have better things to do than roam TH-cam and attack people's videos.
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed...
Yeah but if they build a bunch of luxury homes and no one can afford them at the price they are listed for, guess what. They just became affordable because the builders will still need to unload them
@@SavvyBayAreaHomeOwner you're a realtor and you block dislikes on your channel. You're not a trustworthy person when it comes to real estate because you're incentivized to mislead.
@@SavvyBayAreaHomeOwner In Dallas morning news. Company black stone is buying Dallas residential real estate now. Also some company is buying Conroe near Houston. If you like you can google this kind of information
More than half a million people have died in the US alone - there should be LOTS of houses on sale just because of that. Add in all the families that had to group up due to economic hardships and that's even more houses loosened up.
Not really. Most that died were older and their homes are needed by the surviving spouse. Others have been past down to children who also need those homes or were already living there to care for their aging parents. Also there were a number of folks that were renters and not owners. Overall, the impact has been pretty small to the overall market.
@@EdsPlace - Birth and death numbers are not directly correlated. There's a 20 year delay in the numbers we refer to as "a generation." The adult that dies today is removed from the economy. The child that is born today will not "enter" the economy for 20 years. Also, there are the "productive years vs the non-productive years in each persons life.
@@valkyriefrost5301 I think we are more or less in agreement. I was attempting to explain to op that there is not excess housing due to deaths because 2020 was relatively normal mortality. Although I would compare 20 something new home buyers to deceased population. Not saying babies are out buying houses and make up for excess
What I don't think you took into consideration is the fact that people are leaving the coastal states and moving inland where they can buy houses for cheap.
Banks and huge real estate trusts are buying up a lot of these homes, often above asking out the gate. They're doing this because interest rates are low, to protect against inflation, and they plan to hold and rent these homes, not sell them. Big money usually moves into land to guard against inflation risk. Another thing this guy is not accounting for, it's birth rates from 20 to 30 years ago that matter when looking at today's housing market.
Zillow allows you to see the properties they own by checking "Zillow Owned" in the filter box. Still seems like a relatively small amount of properties. But it is certainly growing!
This is the one item that is missing, how much housing is being bought by companies. And you may think well, eventually without tenants or people to sell to, they'll pull out or there will be a correction. However, more likely to happen is for companies to double down, buy up more supply, hold, hold them empty if they need to, to artificially inflate prices.
@@J_Dubs I think you are absolutely correct. Investors (including 'companies') can AFFORD to hold on to vacant properties, given favorable corporate tax laws and other public subsidies. And they can always look forward to an eventual public (i.e. government) bail-out (just as they received in 2008) in the worst-case scenario.
I'm currently looking to purchase a house in AZ. Been looking since March. Since then prices for the homes gone up $60,000 for new construction. It's not a first come first serve market, but instead, they are putting people on lottery lists to get the home. You have your name put in a jar, on paper, and it will be drawn randomly. The builders are only releasing 2-4 lots per development. $60k in 3 months is unsustainable.
I sold my house 20 miles from downtown Austin and sold it in 2 days for 10k above asking all cash. I am amazed that bricks have gone up in price so much in the past dozen years.
Homes (houses, condos, even apartments) a short commute to places with high paying jobs are much more expensive than homes a long commute away. That would indicate we are short on homes close to work and there may be plenty of homes further away. The pandemic allowed people to move away from the offices since we're working from home bidding up prices away from the offices. As people return to the office people may have to move again pushing prices up near the offices and dropping prices further (or longer) away. What we're really short of is homes by convenient working public transit to work - short both the working transit and homes by it.
Thanks for the comment Karl! I think your point is a good one for markets like NYC, Boston, and Los Angeles. But less so for the rest of the US, which relies almost exclusively on driving.
Another major variable is the youth of this country’s ability to buy that home. With the exodus of mfg jobs and thereby all the white collar jobs than went with it, we are left with a critical mass of service jobs from F&B to Sales & Marketing. These is not enough high paying jobs for people to buy houses and the median prices are way out of scale compared to potential young home buyer wages. In the first spike, the youth adults had the money to purchase the homes and then there were the speculators that flipped houses and drove the market up. So, young adults can predominantly buy condo’s or just rent hence you see all these rental mega units being built which is skewing the graph.
Good point! Millennials feel increasingly stressed in terms of finances, which impacts both the ability to afford a home and the ability to afford children. Demand for both are linked.
I'm curious how much buying from wealthy investors, pensions funds, private equity, international funds and so on are influencing what we're seeing in the housing market? There have been stories of big money buying up whole developments from the home builders directly before one home ever even hits the market then they turn around and rent the houses to people. When can we expect a return to normalcy in the housing market or does the market have to go through a hard reset for that to happen?
Investors often provide short-term demand, pushing prices higher in the short-term. But they are usually the first out the door when prices start declining.
@@ReventureConsulting This definitely seems different because they're buying up property at times before it even hits the market and then turn around renting those properties to other people. That signals to me this is more long term then just buy and flip speculation.
Lots of Luxury condos available in Anaheim, CA listing for 600k to 800k for a 2 to 3 bedroom Condo. Who can afford that? We are going to downsize and move to Texas with by my daughter but will wait a year.
I live in Salt Lake County, Utah. The Zillow price estimate on my home is 21% higher today than it was 9 months ago. I've thought about selling, but rent prices seem to be up even higher. I'm not sure what is driving the surge in prices, but the price for homes & rents is skyrocketing.
Don't rent, my rent has almost doubled since 2014. If you have lived in you're house for more than 5 years you're mortgage payment is probably lower than the average rent and renters also face much more restrictive rules and don't get as much space.
I’m renting a townhome up in Farmington for $1,500. Yes, I could buy a house for that kind of money but there are virtually no houses on the market north of Salt Lake. No surprise. Who would sell a house when they can live there for free thanks to the mortgage forbearance? Once people have to pay the mortgage and work for a living again, houses will hit the market. I’m waiting a bit.
@@mylesgray3470 if you look at the actual numbers you’ll see 1. more and more people are exiting their mortgage forbearances. 2. Mortgage delinquencies are decreasing 3. Most mortgages since 2008 have fixed rates, and lending standards have tightened significantly. If you’re expecting massive foreclosures and a 2008 like crash, you’re going to be waiting for a while….
@@miyagidojo9479 I’m not expecting a housing crisis but I do expect more than 1 or 2 houses on the market in a given town. In my neighborhood of around 200 housing units, only 2 were on the market for sale last month, this month zero. That’s not enough inventory for me. I’m not willing to bid 25% over market for a house due to lack of supply. I’ve never in my life seen tighter inventory. It has to free up.
Hey Nick great video. One thing I believe is extremely important that I’m surprised you didn’t mention is income. Speaking for florida yes we are seeing a lot of people migrate here from other states “Miami” as you mentioned. What no one is mentioning is that the people moving here can’t afford to buy because they are living to close to the poverty line. Incomes are not increasing with sale prices even before all the real estate madness started. As a real estate agent more deals this year are being swallowed up by institutions/companies.
I believe that the actual reason for the bubble is speculation. Houses are being bought and held just like a commodity. In OC CA condos are being bought in cash by "investors" to then "rent them out", but they want so much money that they sit on the market way longer than when they are for sale.
100%! Talked about this in my last video on Housing Bubble v. Inflation. Real estate was a slow and steady asset from 1900 to 2000. Since then it's volatile and speculative.
Yep, average Joe’s are buying up as manny houses and the bank leverage allows them in hopes of getting rich. My landlord is a barber and owns 4 properties shopping for 5th. An old coworker had 13, another had 7 or 8.
There are lots of investors including institutional in the real estate market. A lot of equality in the market. The printed money has to find a safe haven - real estate being one of them. Interest increase will be the true cause of real estate decline.
Bought my house 6 years ago ($124k; 1,258sqft.); about to close on it for $185k plus a couple of extra perks from the buyer. The home across the street from me has a cracked foundation, and sitting empty for 8 years now. There are also 4 mobile homes on my block. The market is crazy stupid right now.
You are asking the kind of intelligent probing questions that every other financial/news people SHOULD be asking but are not. They just parrot FED, NAR etc. Well done. Subscribed.
In Orlando they have been building tons of luxury apartments and new homes with a price point that doesn’t fall under $400,000 for a home and $2300/month for the apartment. I can’t afford anything right now so it’s either move in with mommy or relocate to a cheaper place. Oh and I have a bachelors degree in the Medical field, so I’m too rich to get assistance and too poor to survive here apparently.
True your point about supply and demand. However, i think you're missing another factor - relocation causing regional/localized demand in housing where housing is limited. People are moving out of bigger cities and are now able to work farther away from a corporate office. Food for thought.
all of this sounds great but i feel like it's missing a huge data point, what about units (homes) destroyed each year compared to how much is being made? for example with all the hurricanes and wild fires would that further cause the shortages to contrast with areas in a glut?
My son and his girlfriend put in two offers on two different houses each. There were only 5 bidders on each house. Thier separate bids were two of the five on each house. One offer was cash, one offer was a substantialy bigger offer with a mortgage. Both of the cash offers were accepted by both homeowners. They took the best of the two houses. They ended up paying the appraisal price thankfully. It needs work but the location is good. No one said you cannot play the multiple offers game to your advantage.
The housing market crashed 15 years ago for several reasons. Primarily the US gov, decided to tell bankers that they would buy ALL loans from them. This of course encouraged banks and lenders to put ANYONE in a loan. They were called "liar" loans because they really did not check peoples debts and incomes, they "believed" what the borrower said. They also put people in adjustable rate mortgages because they are more profitable to be sold to investors. Then the FED decided to raise interest rates 6% in a 2 year period. That crash was engineered.
Yup spot on. It's the American way. Everything is engineered, rigged, manipulated, monopolized, controlled, smoke and mirrors and a shell game. Bailouts for billionaires 🙄🙄 When you add that up. And the crap they put on television. I honestly feel like I'm living with the carnival. This is definitely not the country I grew up in.
The bad loans definitely had a big hand in the last crash! But I suspect the fundamental reasons prices crash was because they simply went up so much in the previous 7 years, well above wage growth. A similar thing is occurring today. Sometime around 2000 real estate shifted. It went from being slow/steady with minimal price movement to a very speculative asset.
Austin's TX number of permits is still trying to catch up with the demand that it accumulated over the last 10-15 years. So the shortage is not caused by the current rate of houses being built, but it was rather accumulated over many years and just hasn't been fulfilled yet.
Not sure if I agree with you on this video honestly. Most of the demand is probably resale home in which there is very low inventory. I dont think you can count new construction permits as these are delays due to supply.
@@nomatusi7514 check the video earlier regarding 2008 crash, I believe Ohio had few cities that stay appreciation through 2008-2012, can’t remember if Cleveland is one of that, I remember Pittsburgh actually increase in value from 2008-2012
l live in Coeur d'Alene, ID. The city which the Wall Street Journal declared to be the hottest real estate market in the nation. When I first moved up here 17 years ago, houses were cheap. But I was a broke 20-something and even then, I couldn't afford to buy. But as my career and income has risen, so has the price of housing. And now when I finally feel that I'm in a place where I could afford to buy a home, I'm priced out. I could totally afford the homes around here from 17 years ago, but not now.
Thanks for the personal insight Courtney! It's unfortunate how long-time residents across Idaho are getting priced out! I'll be putting out a video on Boise on Wednesday. Make sure to tune in. Will also be discussing Idaho real estate in general.
I am one of those people pricing out residents of Idaho, I am typing this from a hotel in couer d'Alene right now while house hunting. I live in the communist People's Republic of Washington and am trying to escape. Not excited about it, but my community is deteriorating rapidly and I can't raise kids in such an environment.
It depends on what your goals are for housing. Having affordable family homes, ideally those with larger yards with room for ornamental and food gardens and play areas, is preferential to packing as many people on quarter acre lots.
I hear you. Only places where you can really find the larger homes with big yards at an affordable price are the Midwest and certain parts of the Southeast right now.
@@ReventureConsulting Funny, isn't it, how only a few generations ago, we were an agrarian country where men worked the land, and all of the "progress" has left us living on postage stamps and scrapping over them.
Low interest rates plus lot of money liquidity is inflating the demand for homes. Also most of people who are buying a home they are selling their previous one so there is not a real increase of demand.
Thanks for the comment! Some are also buying 2nd / investor homes, which is a short term stimulus, but will likely result in liquidity into the market after prices peak.
Good logical analysis on ratio of units to population (if homes are purchased on a cash basis). It appears that interest rates and easy money have distorted the housing demand just as they have distorted the stock market. Over the last 20 years, mortgage interest rates have ranged from the 7% range to now under 3%, with adjustable mortgage products sometimes ranging as low as under 2%. Hence many would-be renteres have become home-buyers because they can afford the mortgage payments. Homeowners afraid to sell because of inability to find another home among multiple-offer bidding wars have caused a big reduction in inventory. Forebearance and rent-free situations have further reduced inventory. Yes, I agree the market is over-heated and eventually headed for a fall when normality returns. But there are more reasons beyond ratio of units to to population for the cause of the bubble. However, ratio of units to population may be valuable to predict the severity of a downturn by market.
The problem here: what keeps real estate prices stable: is people looking to move or get a second home. You're not taking into account demand from current homeowners. Most people aren't going to sell at a loss they'd rather stay where they are. This housing supply is effectively off market. Then there are people that just can't afford to sell, in fact they let their houses deteriorate because the upkeep costs more than they can afford. This supply is off market. A lot of new construction is on existing residential lots: they tear down a home to add a new home. This can be net neutral to the housing supply. Look at markets like Seattle, Los Angeles, San Jose, San Francisco. There really is a shortage of housing: because there's a shortage of land. Ultimately you're not going to add to the housing supply unless you're building higher density housing or are building on new land. Yes, demand from new homebuyers may be going down but that isn't the whole equation
The issue is that most sellers won't be even close to taking a loss. Homeowner equity is at its highest level ever. Lots of room for prices to go down but sellers to still make money. 5-10% of new builds are tear downs.
Great content. I'd like to see this broken into for-sale units vs. apartments. DC has a glut of Class A MF, but "starter homes" (aka 1-1.2M in DC - ugh) in close-in suburbs are extremely hot. New permit data can be a little deceptive in big cities like DC that got flooded with institutional scale multifamily in the last decade. We built thousands of apartment units, but also no new single-family homes and relatively few condos.
This is a great point! Denser cities near the coasts tend to build more of the large multi/condo product you describe while failing to address the need for single-family (perhaps due to a lack of space).
Good effort and really an interesting presentation but, unfortunately, the analysis should be using births from 30-40 years back rather than from 2000+. Millenials (born 1981-1996) are in prime home buying years now and boomers are, for the most part, still alive and living in homes as well; combined with other factors such as investor purchases, the need for homes by both these huge demographic groups is the reason we really do have a shortage of homes available for sale right now. The data on births 2000+ is interesting and will be relevant to home sales 10-20 years from now, though.
The ratio of population growth to housing permits doesn’t give the entire picture. If a particular region has an existing shortage as a baseline, your ratio ignores that. A region with an existing glut of housing with low growth could be in the housing shortage on your quadrant with even a modest amount of permits.
@@ReventureConsulting not everywhere had a housing glut...the Bay Area, for example, has been behind on building housing units for a very very long time because of super restrictive zoning laws and insane job growth...in spite of the dot-com bust. I would say most West Coast major cities are in the same boat. Meanwhile I wouldn’t be surprised to hear that some regions are building too much. But your charts don’t explain why places like Austin have ever increasing housing costs (prepandemic) despite tons of permitting. I don’t think the market would be so expensive if there was equilibrium or a glut in the market. You may not have all the relevant data points in some of these cases. I also question whether you should be keeping the 2020 numbers in for the housing stats...I think the data gets skewed too much by the market changes caused by the pandemic. The numbers up to 2019 are more telling of the trend here, though it’s true we can’t completely ignore population shifts during the pandemic.
@@LeeHawkinsPhoto As a Texan that lives near Austin, there are plenty of permits but the rate that people are moving in from other areas is outstripping the ability of the entire local home builder ecosystem to keep up. in other words, supply is up, but demand is up even higher
@@SignalCorps1 that’s what climbing prices usually indicate. I’m thinking that the data presented may not be reflecting the whole picture there. Prices are pretty insane here in Cleveland too...the asking price is just a starting point and it just goes up. I think we’ll see a serious drop in real estate sale prices after the pandemic clears up more, because I think in markets like CLE that demand hadn’t gone up as much as supply of houses for sale haven’t gone up to match. Nobody living in their house wants to show it to strangers during a pandemic.
Thank you for this analysis. I'm in the Tampa Bay market and the changes here in the last 5 years have been jaw dropping. It's good to see we likely have stable house prices ahead.
Interesting anecdote: markets the highest levels of investor demand in the mid-2000s got hit hardest in the subsequent housing crash. Why would that be?
@@altonpaige2388 What makes you think baby boomers' kids are getting any of that wealth? A good chunk of that wealth went away in the four recessions we've had in the last 30 years, and what little is left is being taken by a healthcare system with insane prices and a financial system pushing reverse mortgage scams on old people who are too senile to understand that they're giving a bank their childrens' inheritance, or too greedy to care. The wealth isn't being transferred from boomers to their kids, it's being transferred into the hands of the already wealthy.
Good stuff. I am in Boise, born (78) & raised & in real estate since July 2002. Hot market here... Hard for Idahoans to buy with all the inflated value's.. Sam E. Martin
Thank you for the data backed analysis. Much better than all the opinion based videos going around. Would've liked to see where Maryland landed on your "shortage chart".
On your website.....Good solid data. This video is really a nutshell of your work. I don't really ever care to subscribe...I will with your channel and stay tuned. I think you can contribute to the years of housing analysis I have been conducting. You have some very worthwhile info and for free.........outstanding and thank you.
In the Otay Ranch Area of Dan Diego ..... I’m starting to see homes sit longer.... especially on the west side of Chula Vista where the power lines are still on poles above ground.
One fact never mentioned by most analysts is functional obscelence of existing housing stock. Most of the new homes I build in the Atlanta market are on a lot that was created by tearing down an older home. Sometimes it is one for one, like on small lots or 2 new after tearing down 1 old on larger lots. Homes built post WWII through 1980 will for the most part be replaced. or require major renovation. Then there are the tornadoes, hurricanes, floods, fires. I got my start in the business after a major tornado destroyed a major well located subdivision. I have bought many burned down houses and rebuilt them. I have had many customers buy new homes from me after their home was condemned by FEMA and torn down because it was in a flood zone. Then there is land use changes. Homes and apartments torn down to make way for commercial development, road expansions, condemned by local school boards to build a new park or school. Then there are homes torn down due to condemnation for lack of maintenance or code violations. Homes that are abandoned in towns and cities due to lack of demand from declining population as population grows in other areas. Many cities with zero or negative population growth have a new home construction market supporting my contention that housing demand is not dependent on population growth.
Thanks for the comment Bill! It's an interesting point about tear downs and obsolescence. To me what matters is the relative difference between the mid-2000s, a period where the US built too much housing, and now, a period where the narrative claims we're building too little. Have tear downs and obsolescence increased in that period?
@@ReventureConsulting Banking regulations have made it much more restrictive to build spec homes since the 2008-2009 crash. 2003-2007 I kept 12 houses going at all times. With more capital I am barely able to keep 6 going and with the price of lumber I am scaling back even further. The construction loan doesn't cover the increased cost of lumber so each house uses even more of my working capital. There has been a lot of consolidation in the construction supply chain. There are fewer builders. In 2023 the lot inventory is going to run out. The time frame and cost to develop lots is expanding, permitting, enviornmental, zoning regulations. combined with much faster absorption of lot inventory in 2020-2021 than anticipated. With regard to tear downs, housing boom started in 1949. In 2009 those houses were 60 years old, Now they are 72 years old. However, I am seeing more houses being gutted and renovated, added onto since the price of lumber as increased. That $100,000 obscelecent house now has $50,000 worth of lumber that was once worth only $15,000. That combined with $10,000 demolition costs, and lot shortage, and the scales are tilting in favor of not tearing down houses. As/if lumber prices decrease, the scale will tip back in favor of tear downs. There tear down phenomena was new in 2005. Since then the practice has gone through most neighborhoods like a ravenous wolf and removed the homes most in disrepair. or outdated. A 1975 home that has never been updated, same kitchen and baths, is a $100,000 minimum renovation. I am seeing houses that would have once been tear downs at $400,000 to replace with $1.2 million homes nows selling for $550k as is and a renovator is purchasing them to flip. Put in $200,000 and sell for $900k.
@@ReventureConsulting You have an average of 1.4 million housing permits. What is the average of the 30yr interest rate over that same time period? With the interest rate lower than average, buying a new home will be cheaper than renting.
Inflation is going up everywhere so I'm not sure why you consider housing any different? Look at the price of how much corn oats and soy has gone up in the last year. Look at how much steel and copper has gone up in the last year. It's not just would it's everything.
@TRUTH _ - That's be Thank You Trump and his Tariff Wars with the world (including Canada)! That's what you should be saying, but you will probably never realize (or admit) the overall damage he inflicted on the US economy.
Not everything is going up and don't look at commodity futures (driven by market speculators looking for easy profits) as inflation indicators. Right now, we have a supply chain problem and once it has been resolved, prices will fall back into place. Also, as the commodity bubbles burst (between now and 2022), many speculators will get burned in the process.
First of all congratulations road to 10k subscriber👏👏👏 the first time I watched your video you’re only at almost 2k, 3-4weeks ago! You deserve it Nick...you always have the best presentation, information and data about housing right now...I’m planning to buy but this bidding war is insane I can’t afford. Cant wait to burst this bubble... Keep up the good work!
Thanks for the comment jon jon! Unfortunately not yet. I am planning to eventually bring this data to everyone in a subscription service. Just isn't ready at this time.
@@ReventureConsulting I do data analytics for a Med School, via Power BI and SQL. I am looking to build my portfolio so I can eventually start my own business. If you are looking for some cheap labor (free), I am happy to help.
We built an expensive home in 2010, sold it last July, renting now. Now we want to move to Scottsdale. What garbage for the price. A lot of investors are now selling their homes. This is all FOMO. I think we are going to move there in September and rent. We can't financially keep flying down there to find something to buy and look at this garbage. Flipper houses are gone and most had shoddy workmanship. Other homes are older, terrible floor plans and all need remodeling. So our plan is to go there and rent and find something and hope this emotional FOMO subsides and interest rates go up and they quit printing so much money and the foreclosures may start to hit the market. I'm emotionally exhausted and retirement age. Just want a home to live in and I'm not paying 800k, 900k for this crap.
I was at an open house recently, and went to look upstairs, grabbed the handrail and it literally shook in my hand, it was put together so poorly. The house was a new build! The purpose for homes now is not to last for 30 years, but for the seller to get maximum profit.
@@jayrod9002 I sent my sister to a 950k open house yesterday in Scottsdale. The cupboards were old and painted white. The paint job was so bad and the cupboards were falling apart. There were other bad things too. They put lipstick on a pig and ask a million. Yes, I looked at a new build and the quality is crap. They are oversized apartments -- junk.
Thanks for the local insight! That's sad to hear about the shoddy workmanship. Makes you wonder what the buyers of those homes will do when prices peak. Stay, or go?
A lot of folks are learning how hard it is to sell and rent and then try to get back in. Whether it's due to relocation or speculation. This is happening in many markets up north in Canada as well. Folks are thinking "I'll sell high and rent temporarily then wait for prices to crash..then buy back in when prices hit bottom". Trying to time the market frequently ends in tears. They simply can't get back in.
There are other factors that you aren’t including. For instance, if marriage rates are going down, and divorce rates are going up, that essentially doubles demand for homes.
I’m confused. I live in LA and all I hear from people trying to buy homes are that they are either being priced out of the market or that homes are selling for well above the asking price because so many people are bidding on each individual home. Most homes in the LA metro area I have 15 to 20 bids per home that are driving up the price. If there is no real housing shortage then why is this happening? Is there simply a shortage of affordable homes which in Los Angeles would be any home less than $1 million? Thank you so much for your videos!!
It's a good question. The thing to remember is this shortage with bidding wars is happening everywhere right now, not just LA. So it doesn't necessarily speak to local factors. The thing we're trying to do is look into the future and see which markets will be strong v. weak when the tide of demand comes in over the next year.
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed... It's Just Greed, Greed, and More Greed...
Makes sense to me. Back in 2008/09 here in central Florida there was a glut of houses. Empty houses everywhere. Since then they have built houses like CRAZY !! Now there is a shortage.!!
The demand for homes is high because of the low interest rates, the ability to put as little as 3% down to purchase a home, people being able to live in their homes mortgage free and lenders not being able to start the foreclosure process until later in the year and finally the ridiculous amount of "free" money the government sent out to people that didn't even need it. We will see the market correct (not crash) sometime towards the end of 2022 and possibly bleed into early/middle 2023 if the government decides to keep not letting banks foreclose on homes.
You should use population growth rate instead of birth rate since the USA maintains population growth through immigration. The immigration issue, both legal and illegal, needs to be factored in to properly understand the demand side of the housing market. *edit* I see you addressed it later in the video. That being said, immigration definitely isn't down. Its at ATH overall and has been for years. One year of reduced immigration due to Covid is obviously temporary and I doubt will have a lasting impact on growth rate. Illegal immigration is by definition not easily tracked so we don't have an exact idea of how many people are here and entering the housing market.
@@toeachitsown2050 that's sorta the point, we don't know the absolute number because... They're entering illegally. We know the lower limit but that's more like a minimum the actual number is likey higher bit according to cbpd encounters data, were over 700k for this year alone. Need I remind you we aren't even half way through the year. As for the second question; they have to live somewhere. They do manage to get into homes, im not sure how. Regardless, that does fuel a demand increase.
@@austindubois6293 where do they get this data? I've known a lot of illegals, they usually rent and often multiple people to 1 apartment or home. They also usually get housing with a relative or friend who has their green card or VISA. I do not think illegal immigrants are involved in our current housing frenzy. This is all us and a lot of greed with people who want 2nd homes
@@toeachitsown2050 The encounters data is literally the number of encounters customs and boarder patrol has with people illegally crossing. You're right, they tend to have multiple families in one home or apartment and it's usually in the name of a relative who has their green card. I guess if it's 1 buyer to 10 or something then that wouldn't effect demand too badly. It does have some effect and for obvious reasons we can't really get hard data on it.
Something you also have to keep in mind is how old a city is. A lot of old cities have homes falling apart so they have to build new homes to replace the ones that are dilapidated. Like in NY and Detroit there are Tons of homes that are not livable now that are being torn down.
Those are usually in rust belt cities that are shrinking in population. Detroit and Chicago are good examples, but they are losing thousands of residents every year, and those aren't the cities where new homes are being built.
Can you add a line / graph showing how many homes are being gobbled up by Investment funds and private equity? I live in West LA and see many newly renovated homes sitting empty.
We need to add the number of existing home listings along to the permitted new homes to get a realistic number on the supply side. And we need to cumulate the difference between the population growth (natural + immigration) over the years and home listings (new + existing) to get a better idea of demand, because those people, who could not buy at the time when supply was low for a particular year, will still want to buy later when their personal economic situation and the overall market situation gets better.
Good points Richard! One issue: existing home listings are an extremely volatile number. They're always very low during a Bubble, and then skyrocket when the Bubble pops.
@@ReventureConsulting Yep, when the bubble pops, it makes for a good buying opportunity for investors - not so good for people who own the home and need to sell. That's why I'm waiting now for the next downturn to invest in more properties. One other thing to consider in the birthrate graph, it's those kids who were born 20 or 30 years ago that will be buying homes at the time building permits are pulled. So, you need to move that birthrate graph forward 20 or 30 years to get a more accurate housing supply/demand for the current market.
Stock market has had 10% real returns for over a century and homes have had a bit over 1% real returns over the same period. So not really. As long as companies keep adding value to the economy they should keep growing for the foreseeable future.
What you aren't taking into account though is while population is declining, # of households may not be. People may be having half the amount of kids but whether it's a family of 6 or a family of 3 they still need 1 house. Now maybe there is a demand for smaller homes, but # of homes needed won't really decrease much right now because the baby boomers are generally leaving 1 house when two of them die, but they had 4 kids. Basically I agree with you 20 or so years from now when the 1-2 kids per family that is now are buying and 100% of boomer homes have been re-released back onto the market. But as far as like within the next year or so? We do have a housing shortage.
You're right that household formation is something to consider as well. However - is household formation propped up right now by stimulus/moratoriums? Could we see declines when those things go away?
Excellent presentation of the housing market issues. The policy initiatives by the government will boost the boom in near future. Great to note the information from you.
Houses die just like people. Most houses in the U.S. are not built to last and many also have functional obsolescence. It is cheaper to build a new house than to do an extensive renovation.
You tried to build? After you go through permits inspections lawyers builders and other bureaucracy you’ll understand you are about as wrong as you can get
@@matbob7249 A builder I know in the San Francisco east bay area told me the horror stories you are referring to. I actually did build a house that I designed and managed construction of. I live in a Red state with minimal interference from government. Move to a Red state and have far lower cost of living and more freedom.
@@Bekssss True that land prices are the real problem. The Lincoln Institute for Land Policy used to publish data for the value of housing structures and the land for 46 metro areas in the U.S. It was amazing to see the difference between the high land cost cities of the east and west coasts versus middle U.S. and south.
Great information. What I have been hearing is the price of lumber and building supplies is the reason for the high prices in real estate. I know in this area, a house goes on the market and it sells fast, at really high prices for the area. Example , my house has" increased in value" $30,000 in the past few months. It is insane
Something to consider...high lumber prices have increased the price of newly built houses by about 10%. Those houses reflect about 0.5% of the total US housing supply.
I think you probably have great instincts about economy & housing, which would be interesting to hear! I respect that you use data rather than speculate! Thank you!
In the Midwest the monthly home supply in down to .98. That means their is less than a one month supply of new homes. This is not a bubble market it is price discovery for the housing market. If you go back to 2008 home prices fell below their actual value.Now the prices will continue to rise.Prices are going to continue to rise.
Any analysis based on only two factors is going to be shallow. Why not cross reference against overall housing stock, ie how many permits for new housing are being built on houses that were torn down/being replaced? How closely does price go with available housing stock? Also. Major. Unlisted. Factor: big banks and hedge funds are getting into real estate, buying up entire neighborhood. They are turning housing into rentals, but can take a tax break on unoccupied units. Up to 1/5 of home purchases are going to private capital.
The majority of permits being taken out for housing are for remodels, not new builds. I wish more homes were being built, but that's just not a reality in most places right now.
This is why we sold our home and bought a rv .. our rent, cable , WiFi, water and power costs us $420 a month for a nice lot in a nice campground close to a major city… think outside the box people , life is good when your not stressing about high rent
We are doing the same. Sold our home 3 yrs ago. Living on a 10 acre horse farm with family. Our 40ft 5th wheel is cozy. Our expenses are about 700 a month. No more sweating about property taxes.
It is 100% driven by COVID-19. You had tons of people living in the cities wanting to move to the suburbs if you look at rental prices in the big expensive cities like New York and San Francisco those dropped. So there’s a move from renting an apartment to buying a home. And with companies telling people they can work from home full-time and not commute at all anymore that is another huge factor. All of this housing shortage stuff is only looking at houses and housing permits and not taking into account the rental market. With dirt cheap mortgage rates and no need to commute into the cities there’s a giant shift from renting to buying
Finally got around to finishing this video and I really love it. Right now has been a really hard time for me because although I've worked hard all my life (and have accolades to prove it), I can't find any mid-level job that I deserve. Furthermore, because of the housing bull market I can no longer afford a single bedroom apartment where I live and condos/houses are out of the question. This gives me some hope that this will be a short term blip and relief is on the way. Thank you for the thorough research.
There is a shortage of listings, NOT a shortage of housing stock. The false scarcity is creating irrational behavior among home buyers
Extremely well said! The housing stock is ultimately what will drive long-term prices.
Yeah, and there's a great way to initiate a listing shortage... a foreclosure and eviction moratorium...
I bought a bank-owned foreclosure in 2012, so what do I know... if I'd put the same money into BTC, I'd be richer than cheesecake extract...
Exactly. 5 million house squatters being told they don't have to move or sell.
you are right
@@ReventureConsulting second home buyers or people outside the city (even country) can mess up prices even if the population growth is lower than construction growth.
I’m really looking forward to buying my first home when I’m 50.
No harm in renting until you find the right place at the right price!
@@ReventureConsulting a lot less hassle with renting, and often better value. Most people don't understand comparing a monthly rental payment to a monthly mortgage payment is not an apples to apples comparison.
@@bccsivxx-xxivvii true,its all the same honestly.You are a renter either way.Rent from a landlord that is renting from the government or rent from the government directly being as you never really own where the property.
@@trevishornsby7385 good point. If I did buy a house to live in, depending on the property tax exemptions for homestead, I may own the home in a separate entity like an LLC and rent it to myself, especially if it needed work.
You can also add bank to your statement, bank/government.
@@bccsivxx-xxivvii true,i really like the LLC approach,i think of it as a recycle method where as all the payments,upkeep,an tax benefits are washed thru the company.Own nothing but control everything.lol
It’s not just the quantity of housing, but the type of housing. Many markets are overbuilding luxury homes and under building homes for common folks.
This is true!
But the luxury home market has more demand and a higher margin so builders will naturally gravitate to this segment
@@SignalCorps1 Margins yes, demand... that's unproven. There are quite a few large homes here in Seattle sitting empty while affordable single-family homes are snapped up upon listing.
@@SignalCorps1 I don’t see any demand for luxury housing here. And I am in one of the best neighborhoods in PA. Lots of luxury house listings are sitting here for months, whereat standard homes get multiple offers the next day.
Permitting is expensive and zoning laws prevent multifamily residences. Permit costs are the same if you are building a small home or large home so it is cheaper per square foot to build a larger home due to spreading out the permit cost over a larger square footage. The permit process incentivizes luxury homes.
The most affordable way to live near city centers is multifamily residences such as condominiums, town homes, and duplexes. However many cities have zoned land to prevent multifamily homes.
The problem is a majority of families own their home in the US so they want to protect the value of their home. Those home owners don't want multi family residents built next to them that could harm their home value. Home owners also don't want home prices to go down due to over production of houses and want less houses and only nicer homes built next to them. Thus they vote for strick zoning and permitting that forces luxury homes.
House prices are going up in every country. What’s the common denominator?
Extremely low interest rates. Money printing.
Try,athe rates will continue to decline untill funds an Banks grab all the property the wish to an indebt you on what's left,them state where running to hot an spike the rates an further more price the average person out.either way they win an we lose with the slight of hand tricks
And moving out of cities.
Inflation
@@hectornonayurbusiness2631 NO inflation in the biz districts downtown, rather rampant DEflation.
Bluegoka - you're not focusing on the bigger picture. Interest rates have been an issue for 20 years, but it did not create this newest bubble, although it is a factor. Money printing is not the issue as the money released in the past year is very small compared to the amount of outstanding money already in existence. The crux of the issue is currently investors looking for safe havens and higher returns that they feel they can get through bonds or equities.
The truth is they are bidding up the price of a historically stable commodity just when that commodity is about to take a 20 year dive. Look (partially) to 1990's Japan for how the aging population directly stifles an economy.
I decided to step away from this feeding frenzy. Its out of control, prices are 75,000 to 100,000 over what they were just last year in my area. I've worked hard to get my down-payment just to be priced out the marked.
It's going to go the other way eventually.
I hear you! Things are frustrating right.
@@krisduboise276 I certainly HOPE So!!
@@scottdaunhauer2453 if incomes rise faster than home prices... It's the same thing right?
Invest in Cyber security and biotech , walls its for dumb boomers you could already triple your money in stock market
True - in many cases there is no housing shortage. There’s a proliferation of anti-market practices like mortgages whose terms penalize lowering rent to market-rates, unlimited infusions of foreign investment to squat empty units, and a refusal of politicians to tax vacant units allowing for 70% occupancy rates to be viable.
Good point Tay! Some states are starting to charge higher property tax rates on non-owner occupied units (SC for instance, where taxes are 50% higher if it's an investment property). Hoping to see more of this.
There are no residential loans that penalize lowering rent, maybe commercial but I doubt it. Most people with invest properties pay at least 1% higher on their interest rate and need the rental income to qualify.
Raising property taxes on investment properties is horrible idea. That expense would immediately be passed on to the consumer. Pushing rent up before it forced the middle class that invested in housing to sell to investment group that can afford it. Then when a pipe bursts you won't be calling Mr and Mrs whatever around the corner you'll be calling Amazon investments
I live in Salt Lake City. None of these considerations seem to be affecting the market yet. It took quite awhile for housing prices to hit bottom last crash. As a seller, what should I consider my timeline to be? Do you think things are pretty safe until the end of 2021?
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
@@shustyrackleford7692 you mean blackrock. good point though
There is something deeply weird going on in the housing market prices, and I'm not sure this really covers all of it. The first anomaly is that housing prices are rising despite what should be an economic downturn. The second is that housing prices are rising virtually worldwide - not just in a few cities in the USA, and even in the USA, the price rises are widespread rather than localized.
Theoretically if population is stable, average house age of 25 years (ish) before demolition means that you'd need to replace about 4% of US houses every year. That should theoretically drive the demand side. Technically though, in wealthier times, people want more cabins and second houses; and since the mid 20th century, higher divorce and lower marriage rates (and smaller families) have also effectively meant that people want more houses per person than was previously the case. Immigration (legal and illegal) also adds to the demand side. What's weird though is that MOST of these people need low-end, cheap housing (young adults, divorcees, immigrants), and that is NOT being supplied by the market.
The declining US demographics are a worldwide phenomenon, and yet housing prices are not being affected YET. Retirees want to stay in their own house as long as possible (understandably), meaning that there is no room in the suburbs for young families with kids. This pushes up prices in city centers (where those people hope to find work), and on the distant city fringes (where long they trade slightly cheaper house prices for long commutes). Regular suburban houses will eventually go on the market, but with a 10-15-year delay, after retirees actually die and their kids decide if they still want to keep the old family home in the family or not.
The world is printing money at an unprecedented rate, causing commodities to rise to levels never seen before, i.e., copper highest I have ever seen, wood is the highest I have ever seen, and this goes on and on. There is a tremendous wealth disparity, and the millennials have larger families than the GenXer's who are now looking for housing. When lumber collapses, housing will collapse soon after as 30 to 50 percent of the increase absorbed in material costs of new homes is instantly destroyed.
The largest factor is the interest rate atm. When interest rates are at record lows house prices are going to be at record highs.
Easily explained. Hyperinflation when us dollar is still the world reserve. Prices are going up but the value of each dollar in that price is worth less. The only way demand is even alive is gov backed mortgages at fake under inflation rate of say libor +3 max. Real inflation is way higher than they want us to believe to keep consumer confidence up. Interest rates have been artificially kept at nearly zero since 2008. When the poor (aka those that don't have 20% dp) can't make thier payment on even 2.6% 30 year mtg shits going to get real.
@@apersonontheinternet8006 true. I'm sure that most US houses are a lot older than that, on average. It just feels that they have a shorter average lifespan in the west coast city that I live in. Woodframe houses should be good for 40 years or more (much longer in Europe of course), but in an era of strongly rising property values, anything that is 20 or more years old is seen as a teardown; not big enough to justify the price paid.
Airbnb Hasn’t been mentioned yet…
Around the world homes have been snatched up as “investments” but not to rent, to make them into vacation rentals.
That created a shortage in my town, doubling rent prices + forcing families and workers out. But it’s a nice enough area that people from California will come in and pay way over asking price for whatever is left 🥴
And it’s not just the US, this is affecting all major hubs/ housing markets.
This presentation was phenomenal! I've just started watching your videos. I subscribed when I saw my 1st one. You're opening my eyes to data in a whole new way that isn't overwhelming. Thank you.
Thanks Angel!
There is most definitely a shortage. Demand doesn't just come from domestic single family home owners. You have domestic and international investors as well as international buyers looking for vacation homes, second homes, etc...The demand, for a multitude of factors, is through the roof. Most of the videos I've watched do acknowledge demand and supply, they just don't peg demand to overall population growth, because that's not the driver.
When it comes to construction the numbers are a lot worse than just new permits or starts suggest. If a foundation is laid it's considered a start. The problem with that right now is that their are many projects that haven't and may never get past that point. The rise in material and lumber prices has grinded a lot of it to a halt. I work in a rural market as a mortgage banker. Already I've had general contractors tell me they are looking at other lines of work because it's gotten so bad.
What a lot of people don't understand about most construction loans is that if costs go up in the middle of projects the borrower has to figure out how to make up the shortage to keep the project going. If they can't the project does not continue. Overages are common, overages of the sizes we are seeing are not normal and the borrowers are getting absolutely crushed right now. That also impacts the general contractors.
Applications have dropped 3 months in a row and interest rates are still at historic lows. The minute the Fed decides to raise the rates the impact on the US housing market will be dramatic. What you show with population combined with what we've had with historic low rates for a huge amount of time should be setting off alarm bells for everyone when it comes to the future of the housing market.
People that are buying homes and staying long term will never get a rate in the future that will make mathematic sense to refinance. People that refinanced over the last year will be in the same boat. This will also have an impact on the amount of people that would have otherwise decided to upgrade or move. The rates will most likely be high enough that many people won't leave their situation. The long term impact of the low rates and historic refinancing and purchasing numbers are impossible to tell, but it's not good.
Ultimately the fundamental demand for homes is determined by population growth (job growth is another good metric).
Investor demand is fickle. It comes. And then it goes. And when it goes it brings the market down.
@@ReventureConsulting Which is why long term you're correct. In the short term, as of today, there is a legitimate shortage of inventory. There has been for quite some time now. Depending on what the CFPB does with forbearance that could seriously impact future predicted inventories. Cost of lumber and materials is already starting to impact new construction.
Long term I think inventory will skyrocket. I don't see that happening in the next few months. Redfins market data is a good resource. New listings peak this exact time of the year and we are off pace from 2017 through 2019 levels. I'd also point out it's hard to say how fickle investor purchasing is when it's been on the rise by percentage for over 20 years. That's a long term trend. .
international (e.g. Chinese) and domestic "big boy" investors warping markets everywhere. They are the ones coming in with cash over list price and forcing out those of us who just want a place to live. Make a law that anyone who buys a home has to live in it for at least a year. And make foreign investment illegal. Only LEGAL U.S. citizens should be able to buy.
Supply chain problems were due to covid. Thats going to reset. Stay calm. Repeat. Stay calm.
Yes, I agree. I've seen many investors buying up homes in my area and at my rental areas around military post.
I like how finally someone is using data appropriately to talk about real estate
Thanks Abraham!
I said the same thing last night after watching a different video of his!
This data is very useful, but it's not the entire picture.
You also need to look at the existing inventory, which is always in a state of decline.
Also, you need to account for the migration of the population. For example, people leaving Detroit for Austin or Atlanta will have an impact on all those markets.
I love a good video that confirms my bias! It feels great, but it doesn't give you nuance. This is not a conspiracy theory. The conspiracy is national and international investors buying all our homes. It's BS. They should be TAXED heavily on investment properties. Banks should be given a vacancy tax on their homes just sitting around.
I am an Economics Professor and I love hearing sound research. You did a great job, bravo my hats off to you. I live in Boston a so-called HOT market and we are starting to see prices drop on the outskirts of the county and in the city.
Thanks for the comment Wayne! Interesting to hear about prices dropping around Boston. I am starting to see more price cuts here in Texas.
@@ReventureConsulting One thing I will love to see is how people owning 2-3 homes play into this. Part of the reason we are not seeing homes coming to the market is because people are holding their second and third home in the hope of using it to generate airbnb income. Also, how is inflation and the dollar losing it's value play in this?
@@jbogale airbnb and people who shoulda been foreclosed on are definitely making up a significant portion of former inventory
Yah, prices are dropping (a bit) in a lot of the country right now.
The term " Housing Shortage " does not only apply to actual houses it also applies to apartments. As for apartments there is no shortage of empty apartments in the Chicago area. The company I worked for put up over 2000 units in the past 3 - 4 years and the sad thing is most of them are lucky to be half full. And just like in 07/08 prices are going to tumble it's just a matter of time.
Here in Orange County , CA rents are skyrocketing while thousands of apartments sit vacant. Perhaps landlords don’t want to be stuck with non paying tenants for years?
As long as government laws make it difficult to evict bad tenant, why risk it.
I PRAY THERE IS A "CRASH" soon, we have looked at 8 homes in 5 weeks, making an offer at each, the offers 100% the asking price which we know are inflated and we lost ALL EIGHT!
The most recent, June 1st, asking 289,900, we made a full asking offer, the home sold for 344k.
I spoke with my lender and he said:
"Consider taking a step back, this is going to end badly and there are going to be a pile of people upside down in their new home and that's a bad financial decision".
When your lender offers advice in your favor, TAKE IT! IM OUT for at least two more years, I own my current home free and clear, we can wait.
Wait till the freeze on foreclosure/eviction is over then about 3 months after that the prices will fall when the homes hit the market. Only issue about waiting is the climbing rate of inflation.
My wife and I also been looking at a lot of homes lately. The scariest part is that 90% of offers are waiving the inspection (according to my realtor lol). Even if you willing to drop a lot of money can't beat ppl willing to risk everything
Wow - that's a crazy story!
Also - waving the inspection is nuts. Wonder what those people will do when prices start falling and they realize there's $15k of deferred maintenance in their house.
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
Well, thats pretty nice of you... Lets hope it crashes so others who have invested in their homes lose that equity and possibly go underwater. While there are some who have been reckless, this isnt much different than wishing illness on someone.
Why do you have to buy a house with crazy high prices? Even though the rate is low. You pay even more than the high rate with 30 years. It will be crash because many people cannot afford their payments. Just wait
Well said!
Great report. You're hitting it at an angle no one else is.
Thank you!
1. Baby Boomers are not the largest generation, millennials are.
2. Millennial are at the prime home buying age...and are the largest generation increasing demand
3. Generation X is only very slightly smaller in size than Baby Boomers and are at prime age for downsizing/buying retirement homes (aka increased demand)
4. Population growth over the past 20 years is a poor metric for measuring housing demand in current time. How many 20 year olds do you know thinking to buy a house? Not many right?
5. Permitted homes does not equal built homes.
6. No where in here does it account for homes that are unlivable/torn down
There is a lot in this video that just simply doesn't apply to your thesis...at least not in the short time frame (~5 years from now). In addition to that there are many facts that are ignored that point to the opposite. No disrespect but there is a lot of confirmation bias going on here.
I'd be more worried about a stock market crash dragging the housing market down with it over a housing bubble, and it's not even close.
Right, no one will buy a home immediately after being born.
This channel is all gobbledygook with a sprinkle of “replacement theory” nonsense. This guy knows nothing.
Millennials **recently** surpassed Baby Boomers as the biggest group (2019). I think "this guy" is saying that baby boomers are dying out, ergo, their numbers decrease.
@@Samantha30090 we've been the biggest group for decades.... we are about to have 40 year old millennials. We aren't the biggest group because boomers are dying, we are the biggest group just because there have been more of us since the 90s.
@@amyl3729 Share your statistics, please, because "millennials have NOT always been the largest generation. Key words "not always". “This year, Millennials will overtake Baby Boomers.” It was updated April 25, 2016, to reflect the changing population, under the headline “Millennials overtake Baby Boomers as America's largest generation” I suppose critical thinking isn't your forte', Amy. Now, be a good girl and pull your claws back in. Surely you must have better things to do than roam TH-cam and attack people's videos.
In my market we 189 homes on the market for sale, that’s it. Half are proposed construction and pre-sold.
Crazy figures!
Doesn't account for affordable housing. A lot of the permits are actually for luxury homes.
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
When luxury homes becomes the norm affordable housing is luxury homes. Ofc it can take decades to take effect though.
Yeah but if they build a bunch of luxury homes and no one can afford them at the price they are listed for, guess what. They just became affordable because the builders will still need to unload them
The luxury home market will be the first bubble to pop, as they will run out of renters and buyers. Most luxury homes are owned by aging babyboomers.
Corporations and foreign money are buying up blocks of residential real estate.
If that is so, how is that being allowed?
Try that in Mexico, and see what happens...
@@SavvyBayAreaHomeOwner Where's your data that disputes his claim??
@@SavvyBayAreaHomeOwner you're a realtor and you block dislikes on your channel. You're not a trustworthy person when it comes to real estate because you're incentivized to mislead.
@@SavvyBayAreaHomeOwner In Dallas morning news. Company black stone is buying Dallas residential real estate now. Also some company is buying Conroe near Houston. If you like you can google this kind of information
Agreed! It will be interesting to see what these corporations do when prices top.
More than half a million people have died in the US alone - there should be LOTS of houses on sale just because of that. Add in all the families that had to group up due to economic hardships and that's even more houses loosened up.
Not really. Most that died were older and their homes are needed by the surviving spouse. Others have been past down to children who also need those homes or were already living there to care for their aging parents. Also there were a number of folks that were renters and not owners. Overall, the impact has been pretty small to the overall market.
People die every year but more are born. Excess mortality was less in 2020 than many years in recent decades.
@@EdsPlace - Birth and death numbers are not directly correlated. There's a 20 year delay in the numbers we refer to as "a generation." The adult that dies today is removed from the economy. The child that is born today will not "enter" the economy for 20 years. Also, there are the "productive years vs the non-productive years in each persons life.
@@valkyriefrost5301 I think we are more or less in agreement. I was attempting to explain to op that there is not excess housing due to deaths because 2020 was relatively normal mortality. Although I would compare 20 something new home buyers to deceased population. Not saying babies are out buying houses and make up for excess
What I don't think you took into consideration is the fact that people are leaving the coastal states and moving inland where they can buy houses for cheap.
Yes some markets in less expensive states is going up but once everyone moves it will settle down we are in a great reset
True. Butt costal city prices are allso increasing, strange times
Some markets will continue to rise for next few years (states with no state tax) and one’s with good weather (non coastal)
Banks and huge real estate trusts are buying up a lot of these homes, often above asking out the gate. They're doing this because interest rates are low, to protect against inflation, and they plan to hold and rent these homes, not sell them. Big money usually moves into land to guard against inflation risk.
Another thing this guy is not accounting for, it's birth rates from 20 to 30 years ago that matter when looking at today's housing market.
@@bccsivxx-xxivvii Agree
Most of inventory usually is quickly gobbled by institutions and Zillow is one of them
Zillow allows you to see the properties they own by checking "Zillow Owned" in the filter box. Still seems like a relatively small amount of properties. But it is certainly growing!
This is the one item that is missing, how much housing is being bought by companies.
And you may think well, eventually without tenants or people to sell to, they'll pull out or there will be a correction.
However, more likely to happen is for companies to double down, buy up more supply, hold, hold them empty if they need to, to artificially inflate prices.
@@J_Dubs I think you are absolutely correct. Investors (including 'companies') can AFFORD to hold on to vacant properties, given favorable corporate tax laws and other public subsidies. And they can always look forward to an eventual public (i.e. government) bail-out (just as they received in 2008) in the worst-case scenario.
Well, makes sense for long haul, but right now good luck finding a house WITHOUT getting outbid with multiple offers.
I'm currently looking to purchase a house in AZ. Been looking since March. Since then prices for the homes gone up $60,000 for new construction. It's not a first come first serve market, but instead, they are putting people on lottery lists to get the home. You have your name put in a jar, on paper, and it will be drawn randomly. The builders are only releasing 2-4 lots per development. $60k in 3 months is unsustainable.
Buy land and build your own house.
They want to push everyone into renting.
$240K in one year then. Yep. Unsustainable...
Thanks for the personal insight Mike! I agree that what's going on in the market right now is unsustainable.
And some builders are doing auctions. I'd rather remodel than buy new. Buying a new home from a production builder is a headache.
I sold my house 20 miles from downtown Austin and sold it in 2 days for 10k above asking all cash. I am amazed that bricks have gone up in price so much in the past dozen years.
Said this before, say this again now. Hands down the best RE content on TH-cam, or anywhere really. Thank you Nick!
Wonder if you would consider analyzing international markets as well.Would love to see that content!
Thanks Lawrence! I will be doing a global housing market video at some point. Stay tuned!
Homes (houses, condos, even apartments) a short commute to places with high paying jobs are much more expensive than homes a long commute away. That would indicate we are short on homes close to work and there may be plenty of homes further away. The pandemic allowed people to move away from the offices since we're working from home bidding up prices away from the offices. As people return to the office people may have to move again pushing prices up near the offices and dropping prices further (or longer) away. What we're really short of is homes by convenient working public transit to work - short both the working transit and homes by it.
Thanks for the comment Karl!
I think your point is a good one for markets like NYC, Boston, and Los Angeles. But less so for the rest of the US, which relies almost exclusively on driving.
Not any more, the rural homes are even flying off the shelves. If they have a lot of land or on a lake, they're gone in a matter of days.
Which in turn means that our economy is way to centralized around a few cities.
Another major variable is the youth of this country’s ability to buy that home. With the exodus of mfg jobs and thereby all the white collar jobs than went with it, we are left with a critical mass of service jobs from F&B to Sales & Marketing. These is not enough high paying jobs for people to buy houses and the median prices are way out of scale compared to potential young home buyer wages. In the first spike, the youth adults had the money to purchase the homes and then there were the speculators that flipped houses and drove the market up. So, young adults can predominantly buy condo’s or just rent hence you see all these rental mega units being built which is skewing the graph.
Good point! Millennials feel increasingly stressed in terms of finances, which impacts both the ability to afford a home and the ability to afford children. Demand for both are linked.
I'm curious how much buying from wealthy investors, pensions funds, private equity, international funds and so on are influencing what we're seeing in the housing market? There have been stories of big money buying up whole developments from the home builders directly before one home ever even hits the market then they turn around and rent the houses to people. When can we expect a return to normalcy in the housing market or does the market have to go through a hard reset for that to happen?
Investors often provide short-term demand, pushing prices higher in the short-term. But they are usually the first out the door when prices start declining.
This round of "real estate investor" is not like the old days.
@@ReventureConsulting This definitely seems different because they're buying up property at times before it even hits the market and then turn around renting those properties to other people. That signals to me this is more long term then just buy and flip speculation.
@@valkyriefrost5301 It does indeed seem different.
Lots of Luxury condos available in Anaheim, CA listing for 600k to 800k for a 2 to 3 bedroom Condo. Who can afford that? We are going to downsize and move to Texas with by my daughter but will wait a year.
I live in Salt Lake County, Utah. The Zillow price estimate on my home is 21% higher today than it was 9 months ago. I've thought about selling, but rent prices seem to be up even higher. I'm not sure what is driving the surge in prices, but the price for homes & rents is skyrocketing.
Don't rent, my rent has almost doubled since 2014. If you have lived in you're house for more than 5 years you're mortgage payment is probably lower than the average rent and renters also face much more restrictive rules and don't get as much space.
Thanks for the insight Dan!
Home prices have gone up by way more than rents in SLC according to Zillow Data.
I’m renting a townhome up in Farmington for $1,500. Yes, I could buy a house for that kind of money but there are virtually no houses on the market north of Salt Lake. No surprise. Who would sell a house when they can live there for free thanks to the mortgage forbearance? Once people have to pay the mortgage and work for a living again, houses will hit the market. I’m waiting a bit.
@@mylesgray3470 if you look at the actual numbers you’ll see
1. more and more people are exiting their mortgage forbearances.
2. Mortgage delinquencies are decreasing
3. Most mortgages since 2008 have fixed rates, and lending standards have tightened significantly.
If you’re expecting massive foreclosures and a 2008 like crash, you’re going to be waiting for a while….
@@miyagidojo9479 I’m not expecting a housing crisis but I do expect more than 1 or 2 houses on the market in a given town. In my neighborhood of around 200 housing units, only 2 were on the market for sale last month, this month zero. That’s not enough inventory for me. I’m not willing to bid 25% over market for a house due to lack of supply. I’ve never in my life seen tighter inventory. It has to free up.
Thank you! We really appreciate all you do!
Thank you!
Hey Nick great video. One thing I believe is extremely important that I’m surprised you didn’t mention is income. Speaking for florida yes we are seeing a lot of people migrate here from other states “Miami” as you mentioned. What no one is mentioning is that the people moving here can’t afford to buy because they are living to close to the poverty line. Incomes are not increasing with sale prices even before all the real estate madness started. As a real estate agent more deals this year are being swallowed up by institutions/companies.
This a great point Christian! Income/wages are a huge fundamental driver. Check out the Best v. Worst Cities video where I talk about this more.
This rapidly drives up the sales prices, taxes, and rent. This ultimately prices lower income people out of the market in pocket areas.
I believe that the actual reason for the bubble is speculation. Houses are being bought and held just like a commodity. In OC CA condos are being bought in cash by "investors" to then "rent them out", but they want so much money that they sit on the market way longer than when they are for sale.
100%! Talked about this in my last video on Housing Bubble v. Inflation. Real estate was a slow and steady asset from 1900 to 2000. Since then it's volatile and speculative.
That's okay eventually the cost to carry these will get them
Yep, average Joe’s are buying up as manny houses and the bank leverage allows them in hopes of getting rich. My landlord is a barber and owns 4 properties shopping for 5th. An old coworker had 13, another had 7 or 8.
@@mylesgray3470 Nothing but a 2006 rerun. Whats worse is housing is an illiquid asset
This current bubble is caused by 68 trillion dollars of wealth transferred by baby boomers to their children
There are lots of investors including institutional in the real estate market. A lot of equality in the market. The printed money has to find a safe haven - real estate being one of them. Interest increase will be the true cause of real estate decline.
*equity
I really enjoy your way of breaking down the statistics in ways others have not! Thank you
Thank you Sarah!
Bought my house 6 years ago ($124k; 1,258sqft.); about to close on it for $185k plus a couple of extra perks from the buyer. The home across the street from me has a cracked foundation, and sitting empty for 8 years now. There are also 4 mobile homes on my block.
The market is crazy stupid right now.
Congrats on your sale!
You are asking the kind of intelligent probing questions that every other financial/news people SHOULD be asking but are not. They just parrot FED, NAR etc. Well done. Subscribed.
In Orlando they have been building tons of luxury apartments and new homes with a price point that doesn’t fall under $400,000 for a home and $2300/month for the apartment. I can’t afford anything right now so it’s either move in with mommy or relocate to a cheaper place. Oh and I have a bachelors degree in the Medical field, so I’m too rich to get assistance and too poor to survive here apparently.
Thanks for the insight! That's unfortunate about the price points. Strange because Orlando's wages are fairly low compared to US average.
CNBC had a story on how all the rich hedge fund managers from wallstreet are moving out of NYC for florida, so it makes sense
Florida long history of boom then bust, boom then bust.
@@messijr5145 - straight to moms basement to that dumb azz . .
True your point about supply and demand. However, i think you're missing another factor - relocation causing regional/localized demand in housing where housing is limited. People are moving out of bigger cities and are now able to work farther away from a corporate office. Food for thought.
It's a good point! What's interesting is that prices are still going up in the big cities.
all of this sounds great but i feel like it's missing a huge data point, what about units (homes) destroyed each year compared to how much is being made? for example with all the hurricanes and wild fires would that further cause the shortages to contrast with areas in a glut?
this is absolutely important!
My son and his girlfriend put in two offers on two different houses each. There were only 5 bidders on each house. Thier separate bids were two of the five on each house. One offer was cash, one offer was a substantialy bigger offer with a mortgage. Both of the cash offers were accepted by both homeowners. They took the best of the two houses. They ended up paying the appraisal price thankfully. It needs work but the location is good. No one said you cannot play the multiple offers game to your advantage.
Pretty clever…my son and his wife have had the highest bid more than once but cash prevails and the cash bidder won in spite of lower bid.
Awesome video ! Love the data. Very informative. Thank you for making this and sharing !
Thanks for the kind words!
The housing market crashed 15 years ago for several reasons. Primarily the US gov, decided to tell bankers that they would buy ALL loans from them. This of course encouraged banks and lenders to put ANYONE in a loan. They were called "liar" loans because they really did not check peoples debts and incomes, they "believed" what the borrower said. They also put people in adjustable rate mortgages because they are more profitable to be sold to investors. Then the FED decided to raise interest rates 6% in a 2 year period. That crash was engineered.
Yup spot on. It's the American way.
Everything is engineered, rigged, manipulated, monopolized, controlled, smoke and mirrors and a shell game. Bailouts for billionaires 🙄🙄
When you add that up. And the crap they put on television. I honestly feel like I'm living with the carnival. This is definitely not the country I grew up in.
The bad loans definitely had a big hand in the last crash!
But I suspect the fundamental reasons prices crash was because they simply went up so much in the previous 7 years, well above wage growth. A similar thing is occurring today.
Sometime around 2000 real estate shifted. It went from being slow/steady with minimal price movement to a very speculative asset.
Austin's TX number of permits is still trying to catch up with the demand that it accumulated over the last 10-15 years. So the shortage is not caused by the current rate of houses being built, but it was rather accumulated over many years and just hasn't been fulfilled yet.
Interesting point! There was certainly a shortage from 2010-15 or so.
Not sure if I agree with you on this video honestly. Most of the demand is probably resale home in which there is very low inventory. I dont think you can count new construction permits as these are delays due to supply.
New housing construction starts are at a 15-year high!
I was tempted to buy in Cleveland Ohio but now I’m thinking wait for the bubble to bust prices will change when moratoriums are lifted
The same area that were affected by 2008 crash will be affected this time.
@michael boultinghouse I think that will be a good investment. Farm will not be affected.
Patience is a virtue! Nothing wrong with renting!
@@nomatusi7514 check the video earlier regarding 2008 crash, I believe Ohio had few cities that stay appreciation through 2008-2012, can’t remember if Cleveland is one of that, I remember Pittsburgh actually increase in value from 2008-2012
@@chaoyishih8324 Give me the link. I know Cliveland and Columbus were badly affected in 2008.
l live in Coeur d'Alene, ID. The city which the Wall Street Journal declared to be the hottest real estate market in the nation. When I first moved up here 17 years ago, houses were cheap. But I was a broke 20-something and even then, I couldn't afford to buy. But as my career and income has risen, so has the price of housing. And now when I finally feel that I'm in a place where I could afford to buy a home, I'm priced out. I could totally afford the homes around here from 17 years ago, but not now.
@Coolio Good luck finding an available rental in this town.
@In Your Empty Skull At what price though? I pay $845 for a 2 bedroom. That rate is hard to beat around here.
@In Your Empty Skull and @Coolio are the same person btw, just posting under different alts. Very sad.
Thanks for the personal insight Courtney! It's unfortunate how long-time residents across Idaho are getting priced out!
I'll be putting out a video on Boise on Wednesday. Make sure to tune in. Will also be discussing Idaho real estate in general.
I am one of those people pricing out residents of Idaho, I am typing this from a hotel in couer d'Alene right now while house hunting. I live in the communist People's Republic of Washington and am trying to escape. Not excited about it, but my community is deteriorating rapidly and I can't raise kids in such an environment.
It depends on what your goals are for housing. Having affordable family homes, ideally those with larger yards with room for ornamental and food gardens and play areas, is preferential to packing as many people on quarter acre lots.
I hear you. Only places where you can really find the larger homes with big yards at an affordable price are the Midwest and certain parts of the Southeast right now.
@@ReventureConsulting Funny, isn't it, how only a few generations ago, we were an agrarian country where men worked the land, and all of the "progress" has left us living on postage stamps and scrapping over them.
This is the only good analysis on TH-cam.
Thank you!
Low interest rates plus lot of money liquidity is inflating the demand for homes. Also most of people who are buying a home they are selling their previous one so there is not a real increase of demand.
Thanks for the comment! Some are also buying 2nd / investor homes, which is a short term stimulus, but will likely result in liquidity into the market after prices peak.
Great HARD data!!! Building permits vs Growth population Ratio is KEY!!! Thanks
Thank you!
Good logical analysis on ratio of units to population (if homes are purchased on a cash basis). It appears that interest rates and easy money have distorted the housing demand just as they have distorted the stock market. Over the last 20 years, mortgage interest rates have ranged from the 7% range to now under 3%, with adjustable mortgage products sometimes ranging as low as under 2%. Hence many would-be renteres have become home-buyers because they can afford the mortgage payments. Homeowners afraid to sell because of inability to find another home among multiple-offer bidding wars have caused a big reduction in inventory. Forebearance and rent-free situations have further reduced inventory. Yes, I agree the market is over-heated and eventually headed for a fall when normality returns. But there are more reasons beyond ratio of units to to population for the cause of the bubble. However, ratio of units to population may be valuable to predict the severity of a downturn by market.
Thanks for the comment Dennis! Something to note is that the homeownership rate in the US is 65.6% right now - well above the long-term average.
Would’ve been great to see where seattle sits. Regardless, I’ll do a little research. Greatly packaged content. Subbed
Thank you Joey!
The best information on TH-cam!!!! Thank you!!!!!!⭐️⭐️⭐️⭐️⭐️
Thanks Samantha!
The problem here: what keeps real estate prices stable: is people looking to move or get a second home. You're not taking into account demand from current homeowners. Most people aren't going to sell at a loss they'd rather stay where they are. This housing supply is effectively off market. Then there are people that just can't afford to sell, in fact they let their houses deteriorate because the upkeep costs more than they can afford. This supply is off market. A lot of new construction is on existing residential lots: they tear down a home to add a new home. This can be net neutral to the housing supply.
Look at markets like Seattle, Los Angeles, San Jose, San Francisco. There really is a shortage of housing: because there's a shortage of land. Ultimately you're not going to add to the housing supply unless you're building higher density housing or are building on new land.
Yes, demand from new homebuyers may be going down but that isn't the whole equation
The issue is that most sellers won't be even close to taking a loss. Homeowner equity is at its highest level ever. Lots of room for prices to go down but sellers to still make money.
5-10% of new builds are tear downs.
Great content. I'd like to see this broken into for-sale units vs. apartments. DC has a glut of Class A MF, but "starter homes" (aka 1-1.2M in DC - ugh) in close-in suburbs are extremely hot. New permit data can be a little deceptive in big cities like DC that got flooded with institutional scale multifamily in the last decade. We built thousands of apartment units, but also no new single-family homes and relatively few condos.
This is a great point! Denser cities near the coasts tend to build more of the large multi/condo product you describe while failing to address the need for single-family (perhaps due to a lack of space).
Good effort and really an interesting presentation but, unfortunately, the analysis should be using births from 30-40 years back rather than from 2000+. Millenials (born 1981-1996) are in prime home buying years now and boomers are, for the most part, still alive and living in homes as well; combined with other factors such as investor purchases, the need for homes by both these huge demographic groups is the reason we really do have a shortage of homes available for sale right now. The data on births 2000+ is interesting and will be relevant to home sales 10-20 years from now, though.
Births today are relevant because they impact the desire of millennials to buy, and stay, in a home.
This scenario likely materialize in 2023 or 2024, or even in the fall of this year. The China demographic cliff is already here.
The ratio of population growth to housing permits doesn’t give the entire picture. If a particular region has an existing shortage as a baseline, your ratio ignores that. A region with an existing glut of housing with low growth could be in the housing shortage on your quadrant with even a modest amount of permits.
Relative comparison to mid-2000s - an era with a definite housing glut - is the point!
@@ReventureConsulting not everywhere had a housing glut...the Bay Area, for example, has been behind on building housing units for a very very long time because of super restrictive zoning laws and insane job growth...in spite of the dot-com bust. I would say most West Coast major cities are in the same boat.
Meanwhile I wouldn’t be surprised to hear that some regions are building too much. But your charts don’t explain why places like Austin have ever increasing housing costs (prepandemic) despite tons of permitting. I don’t think the market would be so expensive if there was equilibrium or a glut in the market. You may not have all the relevant data points in some of these cases.
I also question whether you should be keeping the 2020 numbers in for the housing stats...I think the data gets skewed too much by the market changes caused by the pandemic. The numbers up to 2019 are more telling of the trend here, though it’s true we can’t completely ignore population shifts during the pandemic.
@@LeeHawkinsPhoto As a Texan that lives near Austin, there are plenty of permits but the rate that people are moving in from other areas is outstripping the ability of the entire local home builder ecosystem to keep up. in other words, supply is up, but demand is up even higher
@@SignalCorps1 that’s what climbing prices usually indicate. I’m thinking that the data presented may not be reflecting the whole picture there.
Prices are pretty insane here in Cleveland too...the asking price is just a starting point and it just goes up. I think we’ll see a serious drop in real estate sale prices after the pandemic clears up more, because I think in markets like CLE that demand hadn’t gone up as much as supply of houses for sale haven’t gone up to match. Nobody living in their house wants to show it to strangers during a pandemic.
Thank you for this analysis. I'm in the Tampa Bay market and the changes here in the last 5 years have been jaw dropping. It's good to see we likely have stable house prices ahead.
Thanks for the comment Christina!
Problem is we’re competing against foreign investors and companies too
Interesting anecdote: markets the highest levels of investor demand in the mid-2000s got hit hardest in the subsequent housing crash. Why would that be?
No we are competing against 68 trillion dollars of wealth transferred by baby boomers to their children.
@@ReventureConsulting because the home being built then were based on speculative demand rather than organic sales.
@@altonpaige2388 What makes you think baby boomers' kids are getting any of that wealth? A good chunk of that wealth went away in the four recessions we've had in the last 30 years, and what little is left is being taken by a healthcare system with insane prices and a financial system pushing reverse mortgage scams on old people who are too senile to understand that they're giving a bank their childrens' inheritance, or too greedy to care. The wealth isn't being transferred from boomers to their kids, it's being transferred into the hands of the already wealthy.
@@angolin9352 Couldn't agree more. Reverse mortgages are so evil
Good stuff.
I am in Boise, born (78) & raised & in real estate since July 2002. Hot market here... Hard for Idahoans to buy with all the inflated value's..
Sam E. Martin
Thanks for the comment Sam! Great points!
Great video once again !! I’m actually trying to purchase a condo for my mother and the prices are high . Waiting until the market corrects itself .
Thanks Lee!
Great data! I am now going to subscribe. I am glad that I found you!
Thank you Alonzo! Much appreciated!
Thank you for the data backed analysis. Much better than all the opinion based videos going around. Would've liked to see where Maryland landed on your "shortage chart".
Thanks Neftali!
Population growth in Maryland very low last several years.
On your website.....Good solid data. This video is really a nutshell of your work. I don't really ever care to subscribe...I will with your channel and stay tuned. I think you can contribute to the years of housing analysis I have been conducting. You have some very worthwhile info and for free.........outstanding and thank you.
Thank you very much!
In the Otay Ranch Area of Dan Diego ..... I’m starting to see homes sit longer.... especially on the west side of Chula Vista where the power lines are still on poles above ground.
Yes, i was looking at it too. What is the reason for that? I thought should be the the other way since Amazon will add 1500+ jobs
@@arsenstepanyan6537 Almost noone working at Amazon can afford to buy a house
@@arsenstepanyan6537 azon depletes communities wealth
Can they afford to rent?) should we look into buying a property near by and rent it out?
Nick, what do you say?
One fact never mentioned by most analysts is functional obscelence of existing housing stock. Most of the new homes I build in the Atlanta market are on a lot that was created by tearing down an older home. Sometimes it is one for one, like on small lots or 2 new after tearing down 1 old on larger lots. Homes built post WWII through 1980 will for the most part be replaced. or require major renovation. Then there are the tornadoes, hurricanes, floods, fires. I got my start in the business after a major tornado destroyed a major well located subdivision. I have bought many burned down houses and rebuilt them. I have had many customers buy new homes from me after their home was condemned by FEMA and torn down because it was in a flood zone. Then there is land use changes. Homes and apartments torn down to make way for commercial development, road expansions, condemned by local school boards to build a new park or school. Then there are homes torn down due to condemnation for lack of maintenance or code violations. Homes that are abandoned in towns and cities due to lack of demand from declining population as population grows in other areas. Many cities with zero or negative population growth have a new home construction market supporting my contention that housing demand is not dependent on population growth.
Thanks for the comment Bill! It's an interesting point about tear downs and obsolescence. To me what matters is the relative difference between the mid-2000s, a period where the US built too much housing, and now, a period where the narrative claims we're building too little. Have tear downs and obsolescence increased in that period?
@@ReventureConsulting Banking regulations have made it much more restrictive to build spec homes since the 2008-2009 crash. 2003-2007 I kept 12 houses going at all times. With more capital I am barely able to keep 6 going and with the price of lumber I am scaling back even further. The construction loan doesn't cover the increased cost of lumber so each house uses even more of my working capital. There has been a lot of consolidation in the construction supply chain. There are fewer builders. In 2023 the lot inventory is going to run out. The time frame and cost to develop lots is expanding, permitting, enviornmental, zoning regulations. combined with much faster absorption of lot inventory in 2020-2021 than anticipated.
With regard to tear downs, housing boom started in 1949. In 2009 those houses were 60 years old, Now they are 72 years old. However, I am seeing more houses being gutted and renovated, added onto since the price of lumber as increased. That $100,000 obscelecent house now has $50,000 worth of lumber that was once worth only $15,000. That combined with $10,000 demolition costs, and lot shortage, and the scales are tilting in favor of not tearing down houses. As/if lumber prices decrease, the scale will tip back in favor of tear downs.
There tear down phenomena was new in 2005. Since then the practice has gone through most neighborhoods like a ravenous wolf and removed the homes most in disrepair. or outdated. A 1975 home that has never been updated, same kitchen and baths, is a $100,000 minimum renovation. I am seeing houses that would have once been tear downs at $400,000 to replace with $1.2 million homes nows selling for $550k as is and a renovator is purchasing them to flip. Put in $200,000 and sell for $900k.
@@ReventureConsulting You have an average of 1.4 million housing permits. What is the average of the 30yr interest rate over that same time period? With the interest rate lower than average, buying a new home will be cheaper than renting.
Inflation is going up everywhere so I'm not sure why you consider housing any different?
Look at the price of how much corn oats and soy has gone up in the last year. Look at how much steel and copper has gone up in the last year.
It's not just would it's everything.
@TRUTH _ - That's be Thank You Trump and his Tariff Wars with the world (including Canada)! That's what you should be saying, but you will probably never realize (or admit) the overall damage he inflicted on the US economy.
Not everything is going up and don't look at commodity futures (driven by market speculators looking for easy profits) as inflation indicators. Right now, we have a supply chain problem and once it has been resolved, prices will fall back into place. Also, as the commodity bubbles burst (between now and 2022), many speculators will get burned in the process.
First of all congratulations road to 10k subscriber👏👏👏 the first time I watched your video you’re only at almost 2k, 3-4weeks ago! You deserve it Nick...you always have the best presentation, information and data about housing right now...I’m planning to buy but this bidding war is insane I can’t afford. Cant wait to burst this bubble... Keep up the good work!
Thank you for the kind words Nancy! Much appreciated!
Are we able to access your graphs, specifically “Where is the housing shortage in 2021?” I’d like to see the other cities which were unnamed.
Thanks for the comment jon jon! Unfortunately not yet. I am planning to eventually bring this data to everyone in a subscription service. Just isn't ready at this time.
@@ReventureConsulting ah ha ha ha! Give me a break! You don't want to tell us the truth.
@@ReventureConsulting ah ha ha ha! Give me a break! You don't want to tell us the truth.
@@loverofcalifornia3619 elaborate please
@@ReventureConsulting I do data analytics for a Med School, via Power BI and SQL. I am looking to build my portfolio so I can eventually start my own business. If you are looking for some cheap labor (free), I am happy to help.
We built an expensive home in 2010, sold it last July, renting now. Now we want to move to Scottsdale. What garbage for the price. A lot of investors are now selling their homes. This is all FOMO. I think we are going to move there in September and rent. We can't financially keep flying down there to find something to buy and look at this garbage. Flipper houses are gone and most had shoddy workmanship. Other homes are older, terrible floor plans and all need remodeling. So our plan is to go there and rent and find something and hope this emotional FOMO subsides and interest rates go up and they quit printing so much money and the foreclosures may start to hit the market. I'm emotionally exhausted and retirement age. Just want a home to live in and I'm not paying 800k, 900k for this crap.
I was at an open house recently, and went to look upstairs, grabbed the handrail and it literally shook in my hand, it was put together so poorly. The house was a new build! The purpose for homes now is not to last for 30 years, but for the seller to get maximum profit.
@@jayrod9002 I sent my sister to a 950k open house yesterday in Scottsdale. The cupboards were old and painted white. The paint job was so bad and the cupboards were falling apart. There were other bad things too. They put lipstick on a pig and ask a million. Yes, I looked at a new build and the quality is crap. They are oversized apartments -- junk.
Thanks for the local insight!
That's sad to hear about the shoddy workmanship. Makes you wonder what the buyers of those homes will do when prices peak. Stay, or go?
It was a spec home.
A lot of folks are learning how hard it is to sell and rent and then try to get back in. Whether it's due to relocation or speculation. This is happening in many markets up north in Canada as well. Folks are thinking "I'll sell high and rent temporarily then wait for prices to crash..then buy back in when prices hit bottom". Trying to time the market frequently ends in tears. They simply can't get back in.
There are other factors that you aren’t including. For instance, if marriage rates are going down, and divorce rates are going up, that essentially doubles demand for homes.
And kids moving back home.
Oh, I wouldn't necessarily think so, a lot of those people will just be looking for an apt.
It's an interesting point. The question is what type of home is more in demand - single family or apartment.
This would show up in average household size. That is the number to watch. As housing gets more expensive, household size increases and vice versa.
Fantastic video! Very insightful
Thank you!
I like you. I like your content. No bullshit. I appreciate the video and information. God bless.
Same here
Thanks John! I hate BS!
I’m confused. I live in LA and all I hear from people trying to buy homes are that they are either being priced out of the market or that homes are selling for well above the asking price because so many people are bidding on each individual home. Most homes in the LA metro area I have 15 to 20 bids per home that are driving up the price. If there is no real housing shortage then why is this happening? Is there simply a shortage of affordable homes which in Los Angeles would be any home less than $1 million? Thank you so much for your videos!!
It's a good question. The thing to remember is this shortage with bidding wars is happening everywhere right now, not just LA. So it doesn't necessarily speak to local factors. The thing we're trying to do is look into the future and see which markets will be strong v. weak when the tide of demand comes in over the next year.
$10.000 cash over asking price won’t buy most homes in Phoenix Az. More cash required to close a deal.
Same in Pittsburgh area suburbs
It's Just Greed, Greed, and More Greed... Am I going to Spend $700,000.00 Today on a House that will be Worth $400,000.00 in Two Years??? Hel No, You can... I am Not going to buy a home today to make some Real Estate agent Rich off my Money, But You can... Mama, Didn't Raise, Stupid... No Thank You, I will wait to the Real Estate Market Settles back down to reality and then I will buy... It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
It's Just Greed, Greed, and More Greed...
Makes sense to me. Back in 2008/09 here in central Florida there was a glut of houses. Empty houses everywhere. Since then they have built houses like CRAZY !! Now there is a shortage.!!
I do not feel like getting ripped off.
Go with your gut and avoid the buyers remorse.
The demand for homes is high because of the low interest rates, the ability to put as little as 3% down to purchase a home, people being able to live in their homes mortgage free and lenders not being able to start the foreclosure process until later in the year and finally the ridiculous amount of "free" money the government sent out to people that didn't even need it. We will see the market correct (not crash) sometime towards the end of 2022 and possibly bleed into early/middle 2023 if the government decides to keep not letting banks foreclose on homes.
At some point banks will stop making new loans if they can't foreclosure on existing ones.
You should use population growth rate instead of birth rate since the USA maintains population growth through immigration. The immigration issue, both legal and illegal, needs to be factored in to properly understand the demand side of the housing market.
*edit* I see you addressed it later in the video. That being said, immigration definitely isn't down. Its at ATH overall and has been for years. One year of reduced immigration due to Covid is obviously temporary and I doubt will have a lasting impact on growth rate. Illegal immigration is by definition not easily tracked so we don't have an exact idea of how many people are here and entering the housing market.
Illegal immigration is hard to pin down. But it always has been - in the mid-2000s too.
I'm not sure why people make assumptions that immigration is at an all time high... where is this data?
Can illegals buy homes?
@@toeachitsown2050 that's sorta the point, we don't know the absolute number because... They're entering illegally. We know the lower limit but that's more like a minimum the actual number is likey higher bit according to cbpd encounters data, were over 700k for this year alone. Need I remind you we aren't even half way through the year. As for the second question; they have to live somewhere. They do manage to get into homes, im not sure how. Regardless, that does fuel a demand increase.
@@austindubois6293 where do they get this data? I've known a lot of illegals, they usually rent and often multiple people to 1 apartment or home. They also usually get housing with a relative or friend who has their green card or VISA.
I do not think illegal immigrants are involved in our current housing frenzy. This is all us and a lot of greed with people who want 2nd homes
@@toeachitsown2050 The encounters data is literally the number of encounters customs and boarder patrol has with people illegally crossing. You're right, they tend to have multiple families in one home or apartment and it's usually in the name of a relative who has their green card. I guess if it's 1 buyer to 10 or something then that wouldn't effect demand too badly. It does have some effect and for obvious reasons we can't really get hard data on it.
Something you also have to keep in mind is how old a city is. A lot of old cities have homes falling apart so they have to build new homes to replace the ones that are dilapidated. Like in NY and Detroit there are Tons of homes that are not livable now that are being torn down.
They're perfectly good homes, i disagree.
Those are usually in rust belt cities that are shrinking in population. Detroit and Chicago are good examples, but they are losing thousands of residents every year, and those aren't the cities where new homes are being built.
Can you add a line / graph showing how many homes are being gobbled up by Investment funds and private equity?
I live in West LA and see many newly renovated homes sitting empty.
Yes! That would be very interesting!
The projections I've read say 10-20% of home demand right now is investors/2nd home purchases. About 2x higher than a couple years ago.
We need to add the number of existing home listings along to the permitted new homes to get a realistic number on the supply side. And we need to cumulate the difference between the population growth (natural + immigration) over the years and home listings (new + existing) to get a better idea of demand, because those people, who could not buy at the time when supply was low for a particular year, will still want to buy later when their personal economic situation and the overall market situation gets better.
Good points Richard!
One issue: existing home listings are an extremely volatile number. They're always very low during a Bubble, and then skyrocket when the Bubble pops.
@@ReventureConsulting Yep, when the bubble pops, it makes for a good buying opportunity for investors - not so good for people who own the home and need to sell. That's why I'm waiting now for the next downturn to invest in more properties.
One other thing to consider in the birthrate graph, it's those kids who were born 20 or 30 years ago that will be buying homes at the time building permits are pulled. So, you need to move that birthrate graph forward 20 or 30 years to get a more accurate housing supply/demand for the current market.
General rule of thumb when it comes to realestate and stock: What goes up, must come down.
So simple, yet so true!
Good. I hope it burns to the ground. I need to get some cheap property
Not necessary if it's made of free printed money
Stock market has had 10% real returns for over a century and homes have had a bit over 1% real returns over the same period. So not really. As long as companies keep adding value to the economy they should keep growing for the foreseeable future.
And eventually go back up again. We will always create new highs.
What you aren't taking into account though is while population is declining, # of households may not be. People may be having half the amount of kids but whether it's a family of 6 or a family of 3 they still need 1 house. Now maybe there is a demand for smaller homes, but # of homes needed won't really decrease much right now because the baby boomers are generally leaving 1 house when two of them die, but they had 4 kids. Basically I agree with you 20 or so years from now when the 1-2 kids per family that is now are buying and 100% of boomer homes have been re-released back onto the market. But as far as like within the next year or so? We do have a housing shortage.
You're right that household formation is something to consider as well. However - is household formation propped up right now by stimulus/moratoriums? Could we see declines when those things go away?
The problem is the interest rates as soon as they change the interest rates every thing will change
And supply increase
They can't raise rates though.
The Fed can't raise rates...but if inflation is actually here, the market will make long-term rates go up.
Excellent presentation of the housing market issues. The policy initiatives by the government will boost the boom in near future. Great to note the information from you.
Houses die just like people. Most houses in the U.S. are not built to last and many also have functional obsolescence. It is cheaper to build a new house than to do an extensive renovation.
You tried to build? After you go through permits inspections lawyers builders and other bureaucracy you’ll understand you are about as wrong as you can get
@@matbob7249 A builder I know in the San Francisco east bay area told me the horror stories you are referring to. I actually did build a house that I designed and managed construction of. I live in a Red state with minimal interference from government. Move to a Red state and have far lower cost of living and more freedom.
Land is what really crazy overpriced, homes not that expensive, and 3d printing company in next 5-10 years
@@Bekssss 3d is a hype so far. It will happen but so far not much investment in it. Follow the money trail
@@Bekssss True that land prices are the real problem. The Lincoln Institute for Land Policy used to publish data for the value of housing structures and the land for 46 metro areas in the U.S. It was amazing to see the difference between the high land cost cities of the east and west coasts versus middle U.S. and south.
Great information. What I have been hearing is the price of lumber and building supplies is the reason for the high prices in real estate. I know in this area, a house goes on the market and it sells fast, at really high prices for the area. Example , my house has" increased in value" $30,000 in the past few months. It is insane
Something to consider...high lumber prices have increased the price of newly built houses by about 10%. Those houses reflect about 0.5% of the total US housing supply.
I think you probably have great instincts about economy & housing, which would be interesting to hear!
I respect that you use data rather than speculate!
Thank you!
Thank you Charlotte! I appreciate the kind words!
In the Midwest the monthly home supply in down to .98. That means their is less than a one month supply of new homes. This is not a bubble market it is price discovery for the housing market. If you go back to 2008 home prices fell below their actual value.Now the prices will continue to rise.Prices are going to continue to rise.
If you go back to 2006 inventory was just as low as it is now!
Lol Were pushing the top of market already is check up 50%? mine isn't
Any analysis based on only two factors is going to be shallow. Why not cross reference against overall housing stock, ie how many permits for new housing are being built on houses that were torn down/being replaced? How closely does price go with available housing stock?
Also. Major. Unlisted. Factor: big banks and hedge funds are getting into real estate, buying up entire neighborhood. They are turning housing into rentals, but can take a tax break on unoccupied units. Up to 1/5 of home purchases are going to private capital.
Homes being torn down occurred in the mid-2000s, too.
The majority of permits being taken out for housing are for remodels, not new builds. I wish more homes were being built, but that's just not a reality in most places right now.
Evidence based practice has reformed nursing, and is just smart for Economics as well. Thank you, you have a new fan.
This is why we sold our home and bought a rv .. our rent, cable , WiFi, water and power costs us $420 a month for a nice lot in a nice campground close to a major city… think outside the box people , life is good when your not stressing about high rent
Sounds like you are living the life Trish! Congrats!
We are doing the same. Sold our home 3 yrs ago. Living on a 10 acre horse farm with family. Our 40ft 5th wheel is cozy. Our expenses are about 700 a month. No more sweating about property taxes.
I would love to see you cover Florida's housing market and its future, if your up for taking suggestions. Loving your content, thanks.
Thanks for the comment Gill! I've covered Tampa and Orlando recently in deep dives. Check them out!
I understand how there’s shortage in housing when there’s less people traveling, more people dying and less births it doesn’t add up.
Yeah it doesn't. Especially over the last year, when we've had 600k COVID deaths and 70% decline in immigration.
It is 100% driven by COVID-19. You had tons of people living in the cities wanting to move to the suburbs if you look at rental prices in the big expensive cities like New York and San Francisco those dropped. So there’s a move from renting an apartment to buying a home. And with companies telling people they can work from home full-time and not commute at all anymore that is another huge factor. All of this housing shortage stuff is only looking at houses and housing permits and not taking into account the rental market. With dirt cheap mortgage rates and no need to commute into the cities there’s a giant shift from renting to buying
Finally got around to finishing this video and I really love it. Right now has been a really hard time for me because although I've worked hard all my life (and have accolades to prove it), I can't find any mid-level job that I deserve. Furthermore, because of the housing bull market I can no longer afford a single bedroom apartment where I live and condos/houses are out of the question. This gives me some hope that this will be a short term blip and relief is on the way. Thank you for the thorough research.
Thanks for the comment! Good luck in your job search!
Great Video buddy. Great detailed information.
Thank you!
Wow, Awesome video! Very insightful. I just learned alot.
Thanks Jason!