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Location: Danbury CT covering all of Fairfield County
2,636 posts, read 7,432,146 times
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Not enough reasonabilty devolpeable land and all the new construction has been pretty much gereared toward higher move up buyers,nothing really built for average income first time buyers. Condos and apartments have been built over last 15 years in the main city in my region, but not everyone wants one.
I don’t know, but I think the revisionist history is saying people in their mid 20’s bought their forever home once the first kid was on the way and that was that until all the kids moved out?
My parents, from the time they were married in the late 60’s until I came around in the mid 70’s owned three different homes. They bought their first place once they could afford to buy, next house was when my sister came along, and finally shortly after I did and my dad was making enough to afford a larger home.
I also got the tour growing up visiting where they both grew up in Michigan and saw the houses (plural) both sets of grandparents once owned, and my parents (or just their older siblings in some cases) lived in.
Homeownership has also been increasing since the 50’s hitting a peak in 2004, and today’s numbers are almost back up to that peak. So saying it was more common for homeownership amongst previous generations is also a misnomer.
Housing prices have risen faster than wages and inflation, there’s no arguing that, and that does suck, but that’s not entirely a bad in the big picture. It has helped with the gentrification of areas once left for dead a generation or two ago.
I think 'forever home' is a fairly new term regardless. I get that some people always went through the buying/selling/moving cycle. Among the families I know it worked that the children were raised in one home that was bought when the parents were young, but that's not the main point.
My point relates more to SFH vs condo/townhouse. The push towards higher density housing as the alternative to entry level SFHs happened in the last 15 years or so.
It's a complicated issue - but I don't believe it's inevitable that home prices are back at 7x median household income where they've only been once before and of course that ended in tears and a near collapse of the entire system.
30 year Mortgage rates were around 6% in 2006 and are about 3% now. So the median home price can go higher than 5 times median income (which was the peak in 2006) since mortgage payments are much lower now.
Here’s an article explaining that concept with an accompanying chart. https://realestatedecoded.com/the-sh...es-since-1990/
If we need 1.5 million homes.. where exactly are all those people living now? Where did those extra 1.5 million home buyers come from over the last 9 months?
This is just a typical housing cycle. Covid shook things up, people moved out of crowded cities and want to buy the white picket fence home and are driving up prices. This is simply supply and demand but it's focused mostly on suburbs. More people can work remote, covid and inner city protests are driving people out. As the dust settles people will move back into cities, the demand in the suburbs will cool and everything will go back to normal. I don't think we'll see a housing "crash" but a 10% cool down in the suburbs in the next 12-18 months is entirely possible in my opinion.
They have to live somewhere but that doesn't mean they have to live in a house. Everyone doesn't get a house. There may be an increase in population but that doesn't mean the additional population can afford a house. If we magically had 4 million empty houses available at current pricing, how many would be purchased? If there was really this demand for new housing, builders would be building them. Builders only build as many houses as they can sell not give away.
the number may or may not be 4MM single family homes. But it's greater than 0. And it's not magically dumping 4MM in 1 month on the market.
look at my example above.
"Six months of inventory" has always been the benchmark. Maybe that's gone down some with the advent of the internet and flow of information, but not less than 1/3 of what it was.
In my little corner, we had 6 months of new construction all the way up to Jan 2007 (this is when the "crazy CA cash" dropped out btw). My market was in recovery by 2012 - and we had 5 months of inventory. that edged down by a month (8%) through 2019. Today, we only have 1 month of inventory - most of which isn't further along than a hole in the ground.
the number may or may not be 4MM single family homes. But it's greater than 0. And it's not magically dumping 4MM in 1 month on the market.
look at my example above.
"Six months of inventory" has always been the benchmark. Maybe that's gone down some with the advent of the internet and flow of information, but not less than 1/3 of what it was.
In my little corner, we had 6 months of new construction all the way up to Jan 2007 (this is when the "crazy CA cash" dropped out btw). My market was in recovery by 2012 - and we had 5 months of inventory. that edged down by a month (8%) through 2019. Today, we only have 1 month of inventory - most of which isn't further along than a hole in the ground.
Sure. But if building the number of homes that are in "demand" were profitable, don't you think there would be somebody building them to earn that profit? Supply almost always rises to meet demand. Is there some special reason why that would not happen in this case? As you say, maybe this "six months" benchmark is no longer needed and by what data do you know it isn't 1/3rd of what it was? Or is that just a gut call? I could see a temporay imbalance because builders may have miscalculate future demand based on last year's lockdowns but people in this thread are talking about an ongoing ten year issue.
Builders aren't building nearly as many home now as they want to because they can't get the materials and can't get the labor to build them. There's at least a 6 month backlog of material orders on most building materials. What little is available is sky high... and there's not much of that.
Builders aren't building nearly as many home now as they want to because they can't get the materials and can't get the labor to build them. There's at least a 6 month backlog of material orders on most building materials. What little is available is sky high... and there's not much of that.
My company has a backlog in the millions because of the chip shortage. Customer wants to give us money. We are telling them "1Q 2022".
It's crazy. I guess the virus, or the fear surrounding the virus anyway, did a number on the supply chains in a lot of industries.
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