One of the most recent mantras in the financial media is that housing prices rise because there is an inventory shortage. While it is an excellent headline for “getting clicks,” there are 3-reasons why there really is NO housing shortage.Conclusion
As we head into 2021, potentially higher rates and continued economic weakness could collide with elevated housing prices in some areas. Such will result in the rapid reversion of “housing activity” and a surge in “supply.”
No Housing Shortage, 3-Reasons Why There Really Is No Housing Shortage
The next time you hear someone in the media saying the housing market will never go down again because of an “inventory shortage,” it may be worth questioning their view.
As with all data, it is crucial to understand the data’s calculation to derive its real meaning. The problem with most analysis by the media is they tend to extrapolate a current data point into an infinite future.
Reality rarely works that way.
Affordable is a relative term, especially for someone like me who came from another country.
Even closer to home in rural KY lower priced homes last but a day or two on the market. In my county homes that had been on the market for six months to a year or longer seemingly were gone in a flash the past several months. Again, people from all over the country are leaving the urban cities for the peace and tranquility of country life. It is like suddenly everyone wants to live in Mayberry. And I can understand. I have lived in Louisville, Dayton, Cleveland, Rochester, Los Angeles, and Reno. But no place can compare to the small rural town here in KY where I have now lived for 24 years. The people rushing to these areas are not into it for flipping or making a quick buck. It has nothing to with interest rates, the economy, etc. It is a lifestyle thing and I don’t see this changing anytime soon.
Smaller, remote cities have limited number of houses but there are thousands of houses available the Atlanta metro at $250-500K. If you like smaller and cheaper houses just drive another 20-30 minutes and get the feeling of the countryside.
You can find thousands of similar houses in cities across the South East in TN,SC,NC,AL.
See this (link)for the average home value in all 50 states. In many states it's around $200K.
Yup. Everyone is leaving Manhattan for the wide open spaces of ... Brooklyn?? https://www.nytimes.com/2020/09/24/realestate/brooklyn-real-estate-sales.html https://www.wsj.com/articles/brooklyn-home-demand-bounces-back-as-buyers-look-beyond-manhattan-11603281600
It's all relative.