The Bibel Team: Are We Heading Towards a Housing Crash?

Are we heading for a housing crash?

[Timestamp 0:10]:

If you like this content and you want to see more; like, comment, subscribe. We’re here today to talk about, are we heading towards a housing crash? And I know we’ve covered this in previous segments, previous videos, previous conversations, but it’s a conversation in question that we’re consistently receiving from both our clients and referral partners. So, I wanted to take the time here today to lay out empirically why we’re not heading towards a housing crash, and why this conversation continues to be brought up by our clients by you, our viewers.

[Timestamp 0:45]:

It’s all feeling way too reminiscent of 2006, 2007. And why I say that is, the housing market is exploding. It is not uncommon right now to hear of multiple offers. And by multiple offers on a property, we’re hearing 10, 12, 20, 30 offers on properties, and properties going for 5, 10, 15% over the listed sales price. And that’s not just specific here to San Diego county. This is nationally, we’re seeing this information. And it comes down to one driving force: supply. There is a significant shortage of supply within our market. What does that mean? Well, the number of homes that are available for sale does not anywhere near satisfy the demand.

[Timestamp 1:39]:

A recent article, which we’ll reference below, recently came out and said that builders are almost 4 million homes behind the projected to meet and satisfy current demand. 4 million homes at a national level. What does that mean? 4 million homes short to meet the demand. That simple supply and demand takes over. Simple economics take over in the sense that we have an under supply, incredibly high demand, what happens to price? It skyrockets up. So here, we keep thinking and keep getting questions about this. I don’t want to bid so much over asking. I don’t want to overpay for the home. Well, knowing that current state we are behind by 4 million homes nationally to satisfy the current demand, what you pay today, your home is going to continue to appreciate thereafter.

[Timestamp 2:41]:

So even if you are paying, call it 10, 15, 20% over list price, with what the forecast and expectations around values and what they’re expected to do into the near future, you’re setting yourself up to really secure the house. So really, from a crash standpoint, we’re the furthest thing from it. It’s alarming to see how much of a supply shortage there is. And really it’s the opposite to what we’d hear about a pending market crash. Another factor that we want to take into consideration around the current ‘are we heading to a crash’ is around household formations. So again, rewind to 2006. You attribute a lot of that new household formation. So that is people entering the housing market to create a livable transaction. So essentially, a new home is formed in the United States. And we look back to 2006 and a lot of that is tied to birth rates.

[Timestamp 3:42]:

So historic average first-time home buyers are between 33 and 34 years old. You look to the new first time home buyers entering the market back in 2006, tie it back to the birth rates. 33 years prior, the birth rates were actually at some of the lowest that we’ve seen in previous years. So with that, an over supply issue. Back in 2006, builders were building at an astronomical level. Unlike today when we’re 4 million homes short on a supply metrics, back in 2006 there was an oversupply issue. You looked down any street, there was a home for sale. Any builder community, they had phases upon phases anticipated to roll out. Well, that oversupply coupled with low birth rates, so new household formations at a slowing pace, coupled with loan components.

[Timestamp 4:32]:

As we’ve talked about before, back in 2006, 2007, pre that, essentially anyone who had a breath and a credit score could get financing. What do you think was going to happen? Over supply, low demand? Yes. A crash. So fast forward to where we are now, birth rates 33 years before 2020, 2021 were unlike anything we have seen. And the forecast into the next five, six years is that new first time home buyers again, class group 33 to 34 years of age, compounds and exponentially grows each year thereafter. So two factors–expanding household formation numbers (demand) coupled with a supply shortage of 4 million homes off the mark. Increasing demand, decreasing supply. What happens? Prices continue to rise.

[Timestamp 5:28]:

We’re not in a bubble. No, we’re not heading towards the crash, and yes, now is an appropriate time and really the best time to buy. We would love to review this information in greater detail. Please call me and my team today. Thank you.

No Comments

Sorry, the comment form is closed at this time.


Enjoy this blog? Please spread the word :)

Follow by Email