Contrarian Opinion On — Are the Papers Really Right About the Housing Market?

According to the paper, the housing market looks very strong, with single-family homes across the country are in high demand, home values growing.

This record growth is due to various factors, like a low-interest-rate environment and insufficient housing supply.

According to Freddie Mac, due to underdevelopment after the Great Recession, we are short of close to 3.8 million housing units.

But according to Ivy Zelman, CEO of Zelman Associates, neither is the housing market as strong as portrayed nor is there a housing shortage, they say overproduction it is putting the market at risk.

In an interview, Ivy said that as of August 2021 the real estate market is in a position of oversupply and that demand is actually around 21% below current deliveries.

Ivy states that it is very difficult to estimate the future supply of homes because of private equity firms.

The homes bought by large investment firms aren’t always considered into the supply chain, but those homes deliver the much-needed housing units to the market.

She believes the low-interest-rate situation is creating unnatural demand in the housing market, leading the prices to go up.

She says the buying will stop when the rates increase or home prices reach a breaking point, and the market will show that there is more supply.

The increased costs for labor and goods, labor shortages, and inflation have slowed construction and raised costs for investors, hence companies are not starting new developments.

This is similar to the opposition faced by Peter Schiff, CEO of equity firm Euro Pacific Capital who had predicted accurately about the housing crisis of 2008. Only time will tell if the market is strong or if Ivy’s opinion is correct.

Reference Source: MSN

https://www.compareclosing.com/mortgagenews/contrarian-opinion-on-are-the-papers-really-right-about-the-housing-market/

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