Bottom line: the price re-balancing in many parts of the US seems to be slowing. And we may be entering a period where the limited inventory that is available sells for...more. And this is during uncertain, more challenged economic times with higher interest rates. Now imagine what happens when:
1. The economy weakens and rates are dropped to fuel activity.
2. We are under-building and continue to build less of the types of homes the consumer is seeking. By millions.
3. Building labor and materials costs have slowed rising but have not dropped sharply, so building remains expensive.
4. We are in the midst of a $1 trillion government funded infrastructure spending time that keeps labor and materials supplies tight.
5. Many new projects cannot find funding right now. Restarting and completing those can take years, not months.
6. Weather related repairs and rebuilding combined with aging housing stock (on average 37 years) demand construction that does not deliver new supply.
7. Even more people who have been renting to save to buy enter the markets combined with the existing Millennial demand. Add in the 10,000 per day retirees seeking a second home or a smaller more affordable home the younger market also wants....
Under-supply combined with rising demand = price hikes! It's the simplest theory of economics 101. Buying now with higher interest rates - and refinancing later when rates come down a bit - may be cheaper......
