Housing Inventory Shortages – Is Help On The Way?
INVENTORY SHORTAGE – WILL THERE BE RELIEF?
Homebuyers nationwide are facing severe housing inventory shortages while median home prices continue to rise. Pundits are weighing in on whether relief is on the way or not.
Ken McElroy says relief is on the way.
In this four-minute video, real estate guru Ken McElroy points out why inventory relief probably is on the way.
He, however, first mentions that rents are going up by about 1% per month now.
I loved that because it is a great reason to buy, as homebuyers can, of course, fix their payments forever and never have to worry about increasing rents or housing payments.
More importantly, McElroy focuses on a survey that indicates that 20% of homeowners intend to sell over the next 12 months (a 25% increase over previous surveys).
And 60% of those homeowners are in the low end of the market (under $350,000).
He further thinks that the lifting of foreclosure and mortgage forbearance programs will bring many additional sellers to the market.
Barry Habib says no.
Barry Habib was on the National Real Estate Post today discussing inventory and affordability again.
He hit on the usual topics, pointing out again that people should not confuse the 24% annual increase in the median home price with the 13% annual appreciation we have seen.
The median price increase is much larger because people are buying larger and larger homes due to the pandemic and as a result of much more severe inventory shortages at the lower end.
Most significantly, Habib is not optimistic about the inventory situation improving because it is most acute on the lower end of the scale (below $500,000), and it is not cost-effective to build lower-end housing because of the massive soft costs required to build every home.
Hard costs, which are also way up, are simply brick and mortar construction costs, while soft costs include architecture, engineering, inspection and accounting fees, as well as permits, taxes, and legal fees.
Habib also makes the case (again) that this is why we are not in a housing bubble; prices are up because supply is in short supply and will stay that way.
WHO’S RIGHT – MCELROY OR HABIB?
I’ll put my money on McElroy because he has far more “skin in the game” as one of America’s largest real estate investors.
ANOTHER BROKE BILLIONAIRE WITH A 65,000 SQ FT ABANDONED HOME
I recently blogged about the need to save cash and about billionaires going broke because they overextended themselves.
As a result of my research, my YouTube feed sent me additional examples all weekend, and one was so interesting I had to share it.
This video about the Grant Mansion in northern Ontario (yes, the middle of nowhere) shows a 65,000 square foot gorgeous, ultra-modern behemoth that is now completely abandoned.
Mr. Grant started the project in 2005 when he was on top of the world with his wood products company.
Thinking the housing boom would go on forever, he massively over-extended himself by taking on $600 million in debt.
When the 2008 meltdown hit, Mr. Grant lost everything and now his monument to excess, which he no longer owns, is all that is left.
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