4 ms·
a large premise here is that housing is in a bubble because of house price to income ratio is very high. This by itself is not indicative of a housing bubble!
by throw8383833jj 5y ago
a large premise here is that housing is in a bubble because of house price to income ratio is very high. This by itself is not indicative of a housing bubble! It's indicative of lower and lower standards of living as shelter becomes increasingly expensive.
Really really high housing prices are sustainable if the supply is low enough. Imagine a city of 100K with only 10 houses for sale, it doesn't matter if 99K can't afford houses. all that matters is that 10 or more people can afford the remaining houses. as long as that's the case, prices can and will continue to climb higher and higher. this is an incredibly distopian future where fewer and fewer can afford shelter.
Now ask yourself where supply is going. that's the key to understanding the next moves in the housing markets. Builders are still saying, that even at the current prices, they're having a hard time getting a good ROI(considering all the supply and labor shortages) and aren't very bullish which means supply can't increase much. And in much of the country increasing housing supply is made illegal through regulations and zoning.
- naveen99 5y agoHow much housing supply per person would be enough for you ? Currently we are at 1000 square feet per capita, doubled in last 40 years: https://images.app.goo.gl/PpbQjaEDAiFZ5PP28 https://images.app.goo.gl/PpbQjaEDAiFZ5PP28
- itake 5y agoThis doesn't consider the 3 L's of real estate.
- naveen99 5y agoReplace it with: people, people, people.
- horns4lyfe 5y agoThere’s no way you can believe that’s a good indicator of real housing supply.
- naveen99 5y agowhat’s the alternative to real housing ? Inflation adjusted ? Imaginary ?
- aesh2Xa1 5y agoThis graphic represents "house size in square feet" and "square feet per person." It is not "housing supply." The latter is the quantity of single-family homes on the market in common sense. Here's the source for the graphic: https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-square-feet-larger-than-in-1973-and-living-space-per-person-has-nearly-doubled/ https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-s...
- throw8383833jj 5y agoThat's misleading because that's just the new housing supply coming onto the market which is a small percentage of the housing market.
- naveen99 5y agoThat’s that.