CNBC released an article describing the current state of the housing market:
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Rising building materials costs, as well as shortages of land and labor, have left builders unable to bridge the inventory gap, pushing up house prices
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The median house price increased 4.5 percent from a year ago to $269,600 in July
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U.S. home sales fell for a fourth straight month in July
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July's drop marked the longest streak of monthly declines since 2013
Economists polled by Reuters had forecasted existing home sales would rise in July.
What do you guys think of this incorrect forecast? What does this downward trend in sales mean for the housing market?
I agree with The Duke above. I’m very interested to see if lending standards remain the same and thus put a downward pressure on home prices OR if lending standards loosen and the acceptable Debt to Income Ratio rises; essentially allowing people to afford more by allowing them to take on more debt. It’s also interesting to see the income distribution gap. I’m in my early 20s and I think just among my age group- I have friends working in CRE/ IBD/ Med/ Tech who are doing very well and others who just have nothing going on. This is super ancillary and not scientific data. But there is actual data showing the growing spread between upper-middle/ wealthy and the lower-middle/ poor.
This is an interesting point to focus in on I think. I really believe that we are going to have a big issue in the next 15-20 years with respect to the overall employment dynamic in the country.
Not sure if anyone saw the graphic that was floating around the inter-webs a week or so ago that showed that the amount of jobs available has actually outpaced the number of people in the workforce looking for jobs. While a lot of people thought this was great news, if you look at the TYPE of jobs this is extremely alarming. Almost all of these openings are in very skilled/niche labor sectors, and I have a theory that our educational system hasn't shifted quickly enough to bridge this gap, and I would expect this trend to continue. So basically my fear is that we have a more pronounced, dystopian future where the population wants to work but is unable to perform the jobs that are in demand, and the jobs that they can perform is replaced by robotic/autonomous labor while the skilled/very technical jobs remain unfilled and can't yet be replaced by technology.
TL;DR version - watch the movie Idiocracy.
MonkeyWrench, I completely agree with you there. That’s why I’m very bullish on multifamily over the very long term. I think as people can afford less and less in real terms, more people will forever rent. I think people are more comfortable with renting with closer proximity to work/ entertainment than moving out further and buying. I recall reading an article about the new hot amenity being Location- where people care more about that than buying a gigantic home out in the desert area (CA specific).
Honestly I basically foresee life being sort of like a hybrid of Tokyo/the Matrix/Wall-E where people pay like 4k/month to basically have a retractable tube-bed in a skyscraper where they plug in their VR headset and have a feeding tube as the 'kitchen'. Then there will be massive 'common areas' in the apartment complexes as 95% of the space will no longer be dedicated to any one unit.
Don't know if I'm more worried about the fact that I have these visions in my head or about the fact that I'm drooling over the management/leasing fees I could save in the future.