Show me the stats for housing units per household. Hint, it's the same as the year 2000 and in line with historically normal levels. 1.1 housing units per household
Show me the stat for rate of construction relative to population growth. Hint, it's at an all time high.
Show me the demographic trends? Hint, it's towards flat or negative population growth, with most boomers dying over the next 10y, and each successive generation being smaller than the last.
Where are your stats? Inventory, which has nothing to do with actual supply? What happened after the generationally low inventory of the 2000s?
Anyone holding to that peg as confirmation of anything is in for a rude awakening
The number of households is significantly constrained by the supply of housing units, so that seems like a less relevant number.
The relevant stats are people reaching FTHB age (roughly 25-35), minus deaths, plus new construction. And that picture looks pretty bleak:
https://countryeconomy.com/demography/population-structure/u...
There are about 45M Americans ages 25-35. There are about 21-22M Americans in peak die-off age (75+). There are about 1.2M annual housing starts:
https://www.census.gov/construction/nrc/pdf/newresconst.pdf
Sure, by 2035 or so, when baby boomers reach peak die-off age, we're going to have a housing bust. But over the next decade? Most Millennials are screwed, and it doesn't get better until today's middle-schoolers come of age.
Household growth was flat prepandemic https://fred.stlouisfed.org/series/TTLHH
The likely explanation for current RE market is households temporarily expanded due to the various stimulus and forbearances giving many higher disposable income, but we'll likely see this contract again as the effect of inflation takes hold.
(Expanding/contracting can be through roommates splitting/joining, kids moving out etc).
Housing is fungible. Rental units draw from buy demand and vice versa. Substitutable goods work this way on a macro scale.
The millenials who buy, move out of rentals, which drives rents down (or less growth), increasing the spread between carrying cost to rent/own. There's a limit to how far this spread can widen nationally. You can't look at these markets independently.
Number of households show the actual number of housing units demanded, everything else is an input to number of households.
If the question is "Can I maintain the same standard of living as I grew up with?" or "Can I form a family?" or "What are housing prices going to do now?", this isn't an interesting statistic. The number you want to know is "How many people would like to form households but can't because there are no houses to be had?" And that's what I'm citing with the demographic numbers. If there are twice as many people desiring houses as houses available for them, only half the population is going to get a home, and the price that the median home sells for will be what the 75th percentile of the income distribution can support.
To extrapolate out permanent conclusions from a point in time inventory metric is completely flawed analysis.
I'll refer you to the generationally low inventory in the 2000s, coupled with similar widespread shortage narratives. It won't end via the same mechanism, but each bubble is unique.
Inventory will continue to rapidly increase as rates stay over 5%
And again, rate of construction relative to population growth is at an all time high. Every narrative around a supply shortage focused on inventory is clearly and obviously flawed/wrong
The simplistic view is that residences are either rented out or occupied by the owner. In reality a speculative boom creates excessive demand which increases the number of residences that are second homes, Airbnb's, undergoing renovation, on the market, land-banked, etc. Most of this is made possible as capital gains become more significant relative to yields.
It's counterintuitive but a speculative boom can lead to both higher prices and a higher proportion of underutilised residences.
I still have not seen a convincing response to the demographic argument I put forth. The generation entering the housing market now is the large Millennial generation; the generation dying is the small Silent generation. For everyone who wants a house to get one, we need to be building the delta in size between these, and we're short by several million.
Well, implicit in this argument is that a non-trivial percentage of the Millennial generation is actually able to enter this market. Is that actually true? I'm not really convinced that is it, as there's been a lot of chatter about this generation putting off important life milestones like family formation, which would precipitate home buying. To be fair, and to potentially anticipate the counter argument, when the boomers were at this same stage in their life interest rates were much higher. But ... family formation was a much stronger cultural imperative at that time. It very much is not so today.
>For everyone who wants a house to get one, we need to be building the delta in size between these, and we're short by several million.
I agree with this, but for philosophical reasons and not structural ones. If I'm some jerkoff investor, trying to maximize profits, yeah I'd only build high rise lux condos and squeeeeeze that yield because, let's be honest, building family homes doesn't really do that.