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  • CarlG

What Does The Future Hold For The Housing Market

Are you ready for the stall and the inevitable downfall?

There is no need to hide that feeling inside, that "knowing" feeling in our guts telling us that the market is probably about to face its greatest crash in history and here we will explain why we believe this.

Building Materials

Despite bouncing from Covid-19's very low supply and high demand, we believe the world will face new challenges in getting the required building supplies to construction sites or stock piles. The reason for this isn't covid related but fuel prices related. We hold close ties with a few trucking companies and brokers, the numbers don't look so hot. Left and right we hear from truckers just parking their rigs because of the very high fuel prices and poor low paying freight. Such freight isn't making it to the destination and that's fine, for now.

This will create a vacuum, just like when covid. As demand grows (or holds), supply chains on the other hand suffer the pressure of high truck demand and poor truck supply. This will end up causing a vacuum which will only be filled by paying top dollar for the same freight, to make up for higher fuel prices and to motivate current truckers to pick up their freight instead of the fellow supplier's freight. But, there is always a but...

As freight costs goes up, construction companies charge more to build the homes to make up for the higher freight charges.

Interests rates go up, home prices go up or hold because of low supply of homes due to covid era, all this will push the buyers to their limits. How long can we keep this up?

I would say within 6 months the housing market will crash, new home developments will be abandoned, even halfway done. It will be a nightmare.

Will Buyers Keep Buying Despite Record High Interest Rates?

Any buyer who's a conscious shopper will do their math and realize it might pay to wait before jumping in this market. With so many online calculators, they can quickly do the math and see for themselves how crazy the situation is.

Our suggestion is based on your needs and wants. But those who can afford to wait, have the cash at hand, those will be the ones picking the diamonds in the rough when the market crashes.

Two powers are about to collide, and those are supply vs demand. Already we are feeling poor demand, high interest rates are killing demand. The market is turning, from a seller's market to a buyer's market. And here is where you will be able to name your price, as a buyer. Don't be afraid to offer 20% under asking or even more depending on the situation. A few months ago you would have to offer 20% above asking and even then you would have some competition.

Buy or Rent

It all depends on your wants and needs. Can you afford to wait for the right opportunity or do you need a home right away?

Don't forget that renting a home at $2000 per month will take a pretty big chunk of your income, right at $24,000 per year. Those $24,000 are pretty much lost in the wind.

If you buy a home, even when you think it's actual value should be $50,000 less than what it would sell for, in 2 years it wouldn't make much of a difference (if you think of it in the way that in 2 years of rent you have thrown away $50,000, by buying the house even overpriced, in 2 years it wouldn't make a difference, same 2 years you would have had to pay rent to be in a home anyways, and that money now could be equity, not just lost to the landlord. But this is all up to you. We suggest you run the numbers a few times and really consider if buying or renting today is for you.

Welcome to the uncertainty and volatile world we live in. That house could go $50,000 in either direction within 6 months. The more likely direction is down however it's been a crazy couple of years, making it pretty hard to "put the finger on it".

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