In this post I am going to revisit a factoid from the financial crisis that is one of the many points at odds with conventional wisdom. And, it ties in to my counterintuitive points about mortgage access and housing affordability. To recap: There was a subprime/Alt. A credit boom from 2004 to early 2007. However, the credit boom was not a particularly important factor driving home prices higher, and it also was not associated with an expansion of homeownership to families with low incomes and bad credit.
Kevin, I do not dispute your argument of a housing shortage. However, in addition to the factors limiting supply there is another contribution. This is that the demand for second homes has greatly increased. The trend peaked in the pandemic years. Lately there has been a softening.
If boom and bust economics play out we may see housing becoming especially more affordable in the next few years. Some second home owners who joined the multiple home ownership club during the pandemic / short-term rental business frenzy will sell. Others will be pressed to sell due to financial stress. And builders who ramped up construction in 2023 and 2024 to meet demand may discover a buyer's market and respond with more buyer incentives.
Kevin, I do not dispute your argument of a housing shortage. However, in addition to the factors limiting supply there is another contribution. This is that the demand for second homes has greatly increased. The trend peaked in the pandemic years. Lately there has been a softening.
If boom and bust economics play out we may see housing becoming especially more affordable in the next few years. Some second home owners who joined the multiple home ownership club during the pandemic / short-term rental business frenzy will sell. Others will be pressed to sell due to financial stress. And builders who ramped up construction in 2023 and 2024 to meet demand may discover a buyer's market and respond with more buyer incentives.
I agree that this is a factor in the housing market and may have small effects on demand as you describe it.