We need more houses, which means construction and jobs.
So construction needs labor but also lumber, land and financing. We don’t have the last three enough right now. We don’t have enough land to build near the bigger cities where housing is needed most, due to absurd zoning laws. We don’t have easy financing because of higher interest rates. None of these are short term problems.
Basically, I’m saying labor is unusable when you can’t actually construct.
but there's always money sitting on the sidelines somewhere
There are hundreds of new homes being planned for construction in my area, and I know this isn't the only area around the country that is the case - as I've shouted on here countless times, real estate and construction are local and trying to extrapolate them to the national picture is at best an echo of reality.
I'm already seeing new type of financing available for homebuyers in response to interest rates - think seller carry, Australian mortgages, and yes ARMs. Life finds a way and the market responds to keep deal flow going. The past few years were very special in history, and today's 5.5% 30-year fixed is still easy money by comparison.
re: That's cute but it's true - there's always someone looking to make a return. There's always someone who wants to start a business. You and me - we may not have money in our pocket, but there's a lot of money in the world and there's always someone who sees opportunity where others see danger and who will move money around to the corners that are generating a return.
there's always someone who sees opportunity where others see danger and who will move money around to the corners that are generating a return.
That makes sense. It won’t be just traditional lenders who’d be funding new investments. I hope that’s going to be enough if interest rate hikes even further.
What’s causing the shortage itself is complex. The home-building industry lost about 1.5 million workers in the Great Recession of 2007-9 and has been in a labor shortage since. Land has grown more expensive. Lending tightened for builders, just as it did for home buyers after the bubble. The cost of lumber and other materials has risen.
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So construction needs labor but also lumber, land and financing. We don’t have the last three enough right now. We don’t have enough land to build near the bigger cities where housing is needed most, due to absurd zoning laws. We don’t have easy financing because of higher interest rates. None of these are short term problems.
Basically, I’m saying labor is unusable when you can’t actually construct.
That’s cute but still that’s an assumption.
There are hundreds of new homes being planned for construction in my area, and I know this isn't the only area around the country that is the case - as I've shouted on here countless times, real estate and construction are local and trying to extrapolate them to the national picture is at best an echo of reality.
I'm already seeing new type of financing available for homebuyers in response to interest rates - think seller carry, Australian mortgages, and yes ARMs. Life finds a way and the market responds to keep deal flow going. The past few years were very special in history, and today's 5.5% 30-year fixed is still easy money by comparison.
re: That's cute but it's true - there's always someone looking to make a return. There's always someone who wants to start a business. You and me - we may not have money in our pocket, but there's a lot of money in the world and there's always someone who sees opportunity where others see danger and who will move money around to the corners that are generating a return.
That makes sense. It won’t be just traditional lenders who’d be funding new investments. I hope that’s going to be enough if interest rate hikes even further.
NYTimes summarized it better [1]
[1] https://www.nytimes.com/2022/07/14/upshot/housing-shortage-u...