The 2020 real estate market and the possible 2021 real estate market crash. ✅Join The Power Of Finance Investor Group: https://bit.ly/3aNRzAn
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The U.S. housing market, which has been booming during the pandemic-battered economy, is starting to run out of fuel and today we are going to go over why. With buyers eager to take advantage of low mortgage rates, more and more people are buying homes and the inventory of homes to buy is getting scarce. For homebuilders, the huge demand for housing is an opportunity to crank up construction and solve the inventory crisis, but instead, some are deliberately slowing things down as they grapple with supply shortages, surging lumber costs and intense competition for labor and land. Gene Myers, chief executive officer of Thrive Home Builders in Denver, explained how deliberately slowing things down is ultimately “smart business, but what it does also mean is there will be continued shortages and higher prices.” That’s driving up prices and threatening to derail the boom by pushing homeownership out of reach for many Americans.
After the the virus and lockdowns in March brought sky-high unemployment, most builders expected a crash. But, what they got was a brief pause followed by a crush of buyers armed with the lowest interest rates on record and a burning desire for more space in the suburbs. And this was a lot for the market to handle because the supply of existing homes has been shrinking for years and is currently at an all-time low. It would take a little more than three months to run out of new homes for sale, the lowest level on record, according to government data dating back to 1963. And to put that into perspective a balanced housing market is considered to have 6 months of new home sales before running out
Ok so not only has demand drastically increased during the pandemic because people want to stay at home and have more space in the suburbs but also something very big happened with the lumber market. During he pandemic just like most businesses lumber mills shuttered closed amid nationwide lockdowns, for most of March and April. At the same time Americans wanted new and improved houses, or were at home so they wanted to do their own home renovations causing the price of the building commodity to balloon. The price of lumber futures skyrocketed to a record high of $928.5 per thousand board feet on Sept. 1, more than triple its levels during its low in April. As a result of this, the National Association of Home Builders said the spike in lumber prices was adding about $16,000 to the average new home. While this combined with mortgage rates at 50 year lows wasn’t enough to discourage the high demand for escaping cities it could lead to a very big crash moving forward
Ultimately, the looming issue right now is that the demand for housing is outstripping supply at a time when construction has gotten more expensive. This is making homes more expensive and making home ownership out of reach many families. Real estate sales are now beginning to slow down in some areas of the country
#RealEstate #Crash #HousingMarket
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