The Expert Podcast

Everyone thinks we're going to be able to build more houses to get out of the housing crisis. And whether that crisis is the fact that there's homeless people that don't have a house, or even if there are homes available, but they're too much money where you can't afford the rent, can't afford to buy it, it doesn't seem like the building part is going to really be taking off. According to this article from realtor.com, which quotes a whole bunch of data from the government records, construction of homes is really taking a nose dive.

Builders aren't wanting to put their money into a speculative house because it costs a lot more money now to build a house than it used to. Between inflation, between lumber costs, between materials costs, also labor costs are higher in order to get workers is higher. But at the same time, there are fewer people buying homes, partially because of interest rates. With all that put together, builders are just turning off the tap on constructing new homes.

And even though there's some inventory available now, this is going to be really a problem in about 18 to 24 months when there's still going to be the same demand and there aren't going to be houses to buy. So if the strategy for the housing market is just to build your way out of the shortage, it doesn't look like the building is happening because the market forces aren't there both in terms of cost and in terms of buying power, supply and demand. The supply isn't going to be there because people aren't building. The demand isn't are is gone now.

And even the houses that are available just to build a cheap spec house now you're talking 200 250 bucks a square foot and that's you know for even a 2,000 square foot house you're talking half a million bucks. So a lot of pressure is going into the housing market. Realtors are already seeing sellers trying to drop prices but they can't drop them too low because of what they owe on them and what they need their equity for. And buyers aren't willing to pay the difference. So, the market's kind of hung up right now where not a lot is moving.

And it used to be that you expected to pay four or 500,000 for a starter home. People just aren't doing it anymore with interest rates back up over 7%. You know, that's going to be a four or $5,000 mortgage no matter how you slice it with all your taxes and your insurance.

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