Google reported in April that the search question “When is the housing market going to crash?” had spiked 2,450 percent in the past month, according to Diana Olick of CNBC. “Why is the market so hot?” searches had doubled in just a week.
Since 2008, everyone has been on bubble watch. The price of anything goes up, for any sort of reason, and it’s deemed a bubble, soon to be popped. The large number of searches implies those shopping for a new home are wondering if they are walking into a trap. Home prices have soared and no one wants to buy at the top.
Olick wrote, “And, in the most telling indication that the market may be in a bubble, ‘How much over asking price should I offer on a home 2021’ jumped 350% in that same week.”
However, home construction over the past decade has lagged behind, as many builders went belly-up in the 2008 crash and large builders have managed inventories more carefully.
According to Freddie Mac the US housing market is 3.8 million single-family homes short of what is needed to meet the country’s demand, wrote Nicole Friedman for the Wall Street Journal.
Natalie Campisi of Forbes explained, “The housing market has been struggling to keep up with demand since the 2010s, when the number of new homes built was slashed in half compared with the previous decade. As the demand for residential real estate has increased, the scarcity of homes for sale has created a logjam on the supply side.”
The usual problems are foiling homebuilders, according to Ms. Campisi: “increased lumber prices, limited lot supplies, supply-chain issues, restrictive zoning laws, costly permits and a skilled labor deficit.”
This generation of skilled labor was neutered long ago when parents insisted their kids go to college so they could get office jobs. At the same time, in population centers, neighborhood associations band together to stop any new development in their backyards. Especially any proposal for affordable homes.
With covid sending municipal staff home to work remotely, the entitlement and permitting process has been slowed by months here in Las Vegas, according to a knowledgeable observer.
This is not your grandfather’s housing market. Blackstone Group just spent $6 billion buying Home Partners of America Inc., which owns more than seventeen thousand houses throughout the US. Some simple arithmetic generates a price per unit of more than $350,000. Compare that to Blackstone’s $7.5 billion purchase of forty thousand homes from 2011 to 2013, or $187,500 per unit.
In between, the firm exited from the single-family rental business when it sold its last shares in Invitation Homes in 2019, which had become the largest US firm in this industry, with eighty thousand homes for lease.
Last year, Blackstone put “its toe back in the market in 2020 by investing $240 million to buy a preferred equity stake in Toronto’s Tricon Residential Inc., which buys single-family rentals in North America,” writes Peter Grant.
Blackstone is not alone, rejoining an expanding roster of Wall Street powerhouses that have acquired single-family rental companies, according to Grant. “Canadian property giant Brookfield Asset Management Inc. recently acquired a stake in a landlord that owns more than 10,000 U.S. homes. J.P. Morgan Asset Management and Rockpoint Group LLC also have made big investments in single-family rental operators.”
Buyers large and small pushed the median existing-home sales price in May to $350,000 for the first time, according to the National Association of Realtors (NAR). That makes for a nearly 24 percent increase from a year ago, the biggest year-over-year price increase NAR has recorded in data going back to 1999.
Of course, trees don’t grow to the sky. “Affordability appears to be now squeezing away some buyers,” said Lawrence Yun, NAR’s chief economist. “There are so many people who have been outbid, frustrated they are unable to buy.”
Raoul Pal of Real Vision says one should compare home prices to the Fed’s balance sheet. He claims the median price index is flat by this metric. Actually, by my calculations home prices are falling in relation to the Fed’s assets. When the median hit $350,000 recently, the Fed’s balance sheet was nearly $8 trillion.
Back in the first quarter of 2007, when the median hit $257,400, the Fed’s footings stood at a mere $862 billion.
The central bank didn’t start its exponential growth spurt until the dark days of September 2008. And it’s never looked back. Will housing prices do the same?
New Conservative Network Seeks Crowdfunding Help
They say we have to go big or go home. We’re trying to go big and bring the patriotic truth the the nation, but we need help.
Readers may or may not realize that over the past year, we’ve been bringing more conservative news and opinion outlets under our wing. Don’t take our expansion as a sign of riches; all of the “acquisitions” have been through sweat and promises of greater things to come for all involved. As a result, we’ve been able to bring together several independent media sites under a unified vision of preventing America from succumbing to the progressive, “woke,” Neo-Marxist ideologies that are spreading like wildfire across America.
The slow and steady reopening of America is revealing there was a lot more economic hardship brought about from the Covd-19 lockdowns than most realize. While we continue to hope advertising dollars on the sites go up, it’s simply not enough to do things the right way. We are currently experiencing a gap between revenue and expenses that cannot be overcome by click-ads and MyPillow promos alone (promo code “NOQ” by the way).
To overcome our revenue gap and keep these sites running, our needs fluctuate between $3000-$7000 per month. In other words, we’re in the red and hemorrhaging.
The best way you can help us grow and continue to bring the truth to the people is by donating. We appreciate everything, whether a dollar or $10,000. Anything brings us closer to a point of stability when we can hire writers, editors, and support staff to make the America First message louder. Our Giving Fuel page makes it easy to donate one-time or monthly. Alternatively, you can donate through PayPal as well.
As the world spirals towards radical progressivism, the need for truthful journalism has never been greater. But in these times, we need as many conservative media voices as possible. Please help keep NOQ Report and the other sites in the network going.
Thank you and God Bless,
All ORIGINAL content on this site is © 2021 NOQ Report. All REPUBLISHED content has received direct or implied permission for reproduction.
With that said, our content may be reproduced and distributed as long as it has a link to the original source and the author is credited prominently. We don’t mind you using our content as long as you help out by giving us credit with a prominent link. If you feel like giving us a tip for the content, we will not object!
JD Rucker – EIC