If it bursts, will houses ever regain their current value?
In: Economics
I don’t think we’re in a bubble because high prices are being caused by real demand increases and supply shortages. And new construction to increase supply is moving slowly because of supply limitations and pricing in the lumber and steel markets.
Basically high prices are supported by actual valid market conditions.
Once supply for raw materials eases up and those prices drop I do think we’ll see new construction increase but that won’t dent the inventory situation for another year or two.
I think we’re at a stage where pricing has exceeded equilibrium so we will see some back off in prices so people will keep buying. We’ll see another back off when new inventory hits the market. Prices won’t crash for either of these events, they’ll just moderate a touch and then I think we’ll return to the relatively stagnant market prices that we saw pre-pandemic.
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