The media loves to beat the “Housing Crash Coming Soon” drums!
And that, unfortunately, is keeping all too many homebuyers on the sidelines – for no reason!
As a result, I like to push back with our own data – or in this case, Barry Habib’s data (from MBS Highway).
The biggest driver of housing prices is simply demand vs. supply.
And – if demand exceeds supply, prices will likely continue to rise.
Mr. Habib likes to remind people of this:
There are approximately 1.4 million new households formed every year in the U.S. (like when a kid moves out of his parents’ home)
BUT – there are only about 1.2 million new homes completed every year.
So, in the short run, we could see housing slow down or even correct.
But – in the long run, this 200,000-per-year demand/supply imbalance will invariably lead to upward price pressure – and that bodes extremely well for the housing market overall.
So, if buyers are already buying a home – for better schools; for proximity to employment; for the ability to fix up the home and make it their own; for an inflation hedge; for a retirement nest egg; for a way to avoid constantly rising rent payments; and/or for a yard for their kids and pets; they might also want to buy for the investment opportunity too because it is very likely that prices will continue to rise in the long run.
Here is a final quick point for renters: This same demand/supply imbalance will continue to push up rents too – so sitting on the fence could get very expensive.
Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
