Housing Shortage 2020

[Daniel J Dominguez]

I would love to get your thoughts on this. Where are we heading and what will culminate from the current political landscape?

We currently have around 3 months supply of homes nationwide and around a 2.7 month supply in Houston TX. For every seller this is at least 4-5 buyers. Developers seem to be hesitant to build new homes due to the cost of supplies (lumber and labor) and the inability to sell to a large population at affordable home prices. Cost of materials and land has gone up 30%. Millennial buyers have entered the market but seem to have a challenging time qualifying for a loan in the current environment (credit scores, high debt-to-income ratio, student loans, low wages). Baby boomers are living longer and would like to downsize, causing high competition within the affordable starter home market. Home median prices seem to be going up (Inflation, demand & supply, Millennials). Interest rates are at all-times lows and seem to be heading lower. 

Here are a few of my thoughts:

1. Developers will collaborate with national and local Govts to socialize affordable homebuilding on a massive scale. Possibly using early versions of 3-d house printing technology. Causing more inventory to hit the market and greatly reducing prices of homes.

2. Many people will default on their mortgages due to the expired forbearance period and slowing of economy. Many of those homes will be absorbed immediately by investors and buyers. 

3. Material and labor costs will continue to rise. Home prices will continue to rise and credit standard will remain strict. Interest rates will hover around 2-3%.  Home ownership will be unattainable for many of the millennials and late gen Z population for several years, causing more apartments buildings to be developed instead of homes. (basically more of what we see now)

4. Govt will socialize the home buying process resulting in lax lending criteria for those with high debt (student loans, credit card debt, auto debt) or possibly some sort of consolidating debt program for first time home buyers, that allows them to roll all their debt into a home. Interest rate will get closer to zero. More high-rise condos and single family homes will be built at a steady pace. Prices will continue to go up but will be offset by the lax lending criteria and low interest rates

5. Banks will release a flood of REO's they've held on to since 2008-09, causing more supply to hit the market. They will sell at a high profit due to low inventory. Interest rates will fall lower. Lending criteria may or may not stay the same

Agree or disagree with this, let me know your thoughts