To be clear, I understand what inflation is, but something that’s only keeping up with inflation doesn’t make sense to me as an *investment.* I can understand increasing value by actively doing something, like fixing the roof or adding an addition, but not by it just sitting there.
In: 1365
Housing isn’t really an inflation issue… its a supply and demand issue… there are more people today then there were yesterday…
Not only are there more people, but every year regulations for building new homes get tougher, and NIMBY groups add more and more red tape and hoops for builders to jump through meaning fewer homes get built, and those that do can cost a fortune just to break ground.
Even assuming you break ground every year there are fewer and fewer qualified and quality trained skilled trades people to do the jobs leading to plenty of delays on the job site, and with near year round wild fires, lumber prices are at al all time high. This means getting into the construction game is more and more expensive and thus riskier every year and so fewer homes get built.
All of that means less and less supply entering the market for a growing population.
Add to that factors like Air B&B and the investment property boom taking single family homes off the market and turning them into hotel rooms, or multi-unit rentals means you have a lot of competition for an increasingly small number of properties.
On top of all of these factors, Housing is a necessity, there will always be a huge demand, you often can’t just “find a cheaper place to live”, without being willing to undergo significant hardship elsewhere, whether that means living in a sketchy area of town, being willing to commute for hours a day and/or living like sardines… so its a sellers market, and with the systems we have created, almost always will be.
Latest Answers