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“Nuclear Winter” For Housing Coming To Your Neighborhood Soon

A mother and daughter sit together on a bed looking up homes on a laptop. Housing demand is surging right now with limited inventory and many millennial buyers.

Winter Is Coming.

Chris Drayer is the CEO and co-founder of the Predictive Analytics company, Revaluate, that we tout often.

Revaluate employs extremely sophisticated AI to analyze databases to see who is most likely to move.

They focus on the “D’s”: Death, Diamonds (weddings), Divorce, Diapers, Diplomas, and the Daily Grind (employment).

In any case, Chris is an expert at “moving” and on the real estate market in general. So, when he predicts a “Nuclear Winter for Real Estate,” as he did in this recent blog, we suggest taking heed because it will no doubt affect us all.

I strongly suggest reading the blog, but I will hit key points in any case.

Long story short: Demand is surging while supply is plummeting, making it likely that many buyers will not be able to find homes this winter.

Why?

  1. Homeowners are not moving/listing/selling. As recently as 2000, 15% of the population moved every year, but that number had dropped by 1/3 to only 9.8% – and that was BEFORE COVID. COVID caused even more sellers to stay put, and, as everyone knows, moving creates listings. So, when more and more people decide to stay put, we will face shortages.
  2. Listings down 41% year over year. This is a supply shock, to put it mildly, that few industries can withstand.
  3. Demand is through the roof. I have addressed this many times, but low interest rates and surging demand from Millennials are significantly increasing overall demand. Average prices have already increased 10% year over year.
  4. Affordability. The increase in prices is pushing many homes outside of affordability ranges.
  5. Builders Ain’t Building. This is a recurring theme too, but builders are not building new units at a pace that even comes close to meeting demand. This is a problem that will not be solved by this winter.

What does all this mean?

  1. Prices will hold – no “bubble” here. The demand/supply disequilibrium means that prices will very likely hold (and continue to increase).
  2. Get in while the gettin’ is good. This is a mantra I repeat often for buyers, as things will only get worse in the near term.
  3. Innovate and nurture more buyers. We will often have to nurture more potential buyers than normal IF we want to maintain our volume and income.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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