Current Events > My take on Real Estate prices

(+) Yeah! (+)

The very low interest rates took alot of supply out and created a supply-demand mismatch. People refinanced and bought rental properties for low rates. With low inventory and such great pent up demand aka everyone who can afford to and wants to buy a house but feels that it's just not the right time, keeps that floor raised as well. The current low supply is able to reel in those at the top of the demand group. For this reason I don't think there ever will be a crash and I don't think the decline will be huge. Again it will only decline until that people at the top of the pent up demand group who can most afford it will break off and buy. There won't be a huge increase in inventory because so many people locked down one-in-a-lifetime low rates. The kicker is if people lose jobs in a huge recession and are forced to sell and possibly relocate. But as long as supply is limited its impossible for prices to drop significantly. Doing some rudimentary napkin math, if YoY inflation was 5% 3/23, 8.5% 3/22, 2.6% 3/21, and 1.8% 3/20, that means 2019 to now there should have been an 18% increase just based on inflation. Prices actually went up 40% to peak and went down by about 10%. I feel like the difference now to the average rate of inflation is easily made up by affordability with increased rates as well as the lack of supply.

Of course if there are mass layoffs in a bad recession that changes everything. If that is the expectation then finding new real estate shouldnt be high on the list of peoples problems. What should be high is finding a job in that environment and being able to still pay for shelter/food and other necessities

Dan_Haren- posted...

which is honestly most of this sub

Sorry did you say BMT

Supersex420 posted...

Sorry did you say BMT

I copy pasted this from a reddit post I made on REBubble

Also, a big contributing factor was that new houses weren't a viable solution either. Supply chain issues made getting materials overly expensive. Normally, you would have to sell your old house for less than it costs to build a new house. That simply wasnt an option. I haven't checked in lately, but I believe that was projected to start getting better around now. It should help things stabilize, but we can only build so many houses at a time. We can't exactly flood the market

Jiek_Fafn posted...

Also, a big contributing factor was that new houses weren't a viable solution either. Supply chain issues made getting materials overly expensive. Normally, you would have to sell your old house for less than it costs to build a new house. That simply wasnt an option. I haven't checked in lately, but I believe that was projected to start getting better around now. It should help things stabilize, but we can only build so many houses at a time. We can't exactly flood the market

And builders also know that if they flood the market then prices go down and that cuts their profits. So I think builders might actually have the best pulse on the market. I mean for these reasons all builder stocks should be going up.

system here is too strained can't do anything about it