Secondly- What would it take for prices to change?
In: Economics
In the years after 9/11, the housing market was hot due largely to bad lending practices. People were getting loans for houses they couldn’t really afford. They moved from apartments to houses. Demand for houses goes up, and builders race to meet demand with new houses.
In 2008, the housing market crashed. Like real bad. Like take down the global economy bad. The people who couldn’t really afford their houses default and move back to apartments. The builders finish the houses they were in process on. And now the banks own a ton of houses that they are looking to unload cheap.
But millennials, who just graduated and thought they would get good jobs and buy houses, are living with their parents and working in fast food.
So tons of houses that no one is buying just sit empty and process are plummeting. Builders stop building. Suppliers stop production. Grinding halt.
Fast forward 10 years or so, the economy is booming, millennials have good jobs and a bunch of savings from living with their parents for a decade, and they’re all finally ready to GTFO and start buying houses. (Pent-up demand)
Problem is, no one warned the builders. And before they can build more homes, they have to find land, buy it, get site plans approved, maybe go through the re-zoning process (slow af).
And more importantly, no one warned suppliers. And before they can ramp back up their production, they have to buy more machines, expand their facilities, and in the case of lumber, literally grow trees.
So, basically, there were a bunch of potential home buyers hiding in their parents’ basement and when the housing market, who thought no one was home, went downstairs and turned on the lights, they all jumped out and yelled “surprise!”
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