I’ve learned more about the crypto world by watching Anthony Pompliano’s videos than anywhere else.
So when he posted a video about housing prices on his new podcast, The Best Business Show, I had to dive in. Here’s my full reaction to this video:
Single-Family Sales: New Construction vs. Existing Homes
There’s more than one way to break down sales of single-family homes. In his video, Pompliano is referencing a chart for new residential sales, or new construction. As far as new construction goes, there has been a decrease in sales of almost 20%, when you compare 2021 to 2020.
If we look at what happened for existing single-family homes, which is the bulk of the sales in America, in June 2020, there were just over 4.3 million sales for existing single-family homes in the US. In June 2021, there were 5.14 million sales for existing single-family homes, a 19% increase in sales year-over-year.
New Construction Challenges
One of the biggest issues today is with new construction. Every year, the United Stated needs 300,000-400,000 additional newly constructed homes to keep up with demand. Over the past year, due to the increase in materials, builders end up losing money. Builders and developers have had to back out of the contract and give the buyers their deposit back, because they cannot make a profit. This has decreased the supply of homes in a year when supply has increased.
What’s Going to Happen to Property Values in the next few years?
Let’s take a moment to look back. From 2005-2007, we had a huge oversupply of homes. Builders and developers were building almost twice as many homes as they will build this year.
We are currently in a cumulative shortage of homes; over the last 10 years, not enough homes have been built. Not only are we not going to build enough homes in 2021, but we also have to make up for the lack of building over the past decade.
Now, we have this huge buyer demand and a limited supply, which means prices likely will stay high. We are starting to see a bit of a shift in the market, where buyers have a bit more control, but it likely won’t affect prices. When you think about all of the money we have printed here in the US, and compare that to what it’s worth, for assets, real estate becomes very attractive.
What’s happening in your market? Are you seeing a shift or are prices continuing to rise?