On The Horizon: The Perfect Storm
The National Association of Realtors reported that 99% of US cities experienced major housing price increases in Q1; 89% saw double digit gains. My wife recently sold a house above asking price in just 7 hours. Sound familiar? Yes, we’re back to 2006-7 with soaring housing costs. The national average sales price is now $397,800. Existing inventory of newly built and existing homes for sale has dwindled to less than 3 months of supply. The only way to mitigate this problem is by building new homes at a faster pace. Fortunately, NAHB is estimating that homebuilders are on track to build 1.7 million new homes in the next year, up 50% from last year. Increasing supply will also release pressure on pricing. On the other hand, when you have the price of lumber skyrocketing over 280% and other building materials increasing substantially, then all bets are off. Spiraling inflation will exacerbate housing prices. Supply problems, inflation, and huge consumer demand are all coming together in a trifecta of pricing pain. Watch this video to get another perspective: click here.
