The Expert Podcast

• Real estate prices have skyrocketed, and interest rates have increased dramatically from about 2% to nearly 6-7%.
• This has caused fear in the building and contracting industry, reminiscent of the 2008-2009 housing crash when developers halted construction.

• After the 2008 crash, builders were cautious, taking years to return to pre-crash building volumes.
• By 2018-2019, some builders began constructing again, but they remained conservative due to lingering fears from the crash.

• The demand for homes surged in 2020 and 2021 due to a housing shortage, but builders struggled to meet demand due to supply chain and labor issues.
• Even with high demand, there weren’t enough materials or labor to build the required number of homes.

• As interest rates rose in 2022, demand dropped, and homes began sitting on the market for months without selling.
• Builders became cautious, opting not to build speculative homes, fearing a repeat of the 2008 crash.

• Builders who survived the 2008 crisis did so by the skin of their teeth and are now avoiding speculative building to prevent financial losses.
• Many are focusing on commission-based construction (custom-built homes) rather than large-scale speculative projects.

• Although inventory has increased, prices are unlikely to decrease, and builders are not increasing construction.
• Buyers might see more concessions, like inspections or mortgage contingencies, but the lack of new builds exacerbates the housing shortage.

• The U.S. faces a housing shortage, with millions fewer homes than needed, contributing to homelessness, evictions, and high rental rates.
• Estimates suggest a shortage of 5 million homes, with little chance of this being addressed due to the decline in new home construction.

• The construction industry faces a shortage of skilled labor, particularly in framing and other essential trades.
• With fewer new homes being built, there’s less opportunity to train new workers, leading to an even more severe labor shortage in the coming years.

• The slowdown in home building will have long-lasting effects on the housing market, with fewer homes and an even greater shortage of skilled labor in the future.