Where is the housing market going over the next few years. The answer is very clearly, nowhere. And the only reason the prices of homes are being jacked up, is due to manipulation. Let us look at simple math and the only math that will make sense.
I am giving you data from the liar’s mouth, uncle Sam (https://www.census.gov/quickfacts/fact/table/US/VET605217). Take the population of the United States, 327,167,434. Then take a look down to where you see “persons per household”, 2.63. Now if we divide the number of people by the “persons per household” we get how many houses we need to house America. That number is 124,398,264. Now take a look at the number of housing units in the United States, 138,537,078. So we already have enough “units” to house another 10 million people. So for all these people running around talking to you about housing shortage, they are lying.
Now you might say but these are “units” not houses. I agree. But let us also agree that we have enough “boxes” for all of US to be housed. Furthermore, we have about 10 million baby boomers that are going to be leaving us soon. These are either couples or single person living in a “unit”.
You can slice it anyway you want, apartments, condos, single family homes, when there is 10 million unit extra that 8% or so extra. We need about 26 million people to stabilize the housing market.
Add that the the wages effectively have been stagnant since 1970. But I am going to add that wage are going to decline (effectively) due to the inflation that the FEDs/ US government must have to delay defaulting on their obligations. That is going to put further pressure on home prices.
Please do not get me wrong. Take a good look at the stock market. Despite the fact that we are in $600 billion trade deficit with China alone, despite the fact that we are increasing the national debt by over Trillion a year, and despite the retraction in earnings (not earning per share) and profits, the markets are hitting new times high almost daily now. What I am trying to tell you is, knowing the underlying mechanics and understanding the numbers, will not stop those who have Trillions from manipulating the prices of homes like they do in the financial markets.
And if inflation started to run, the house price will skyrocket (I am not contradicting myself) but its value will still decline. i.e. if you think of the house price in terms of gold or oil, it will be probably the same if not less. So, if you have a many houses sitting around, you might want to lighten the load since they will no longer make sense as investments. Why, with declining wages the ROI will not make sense for rental, at least compared to what you have today. And as the “nominal” price of the house go up, so will your taxes, insurances and what have you. But due to wage pressure, it is going to be hard to pass that to the renter.
On the other hand, if you do not own a house you might have the opposite problem. You are not going to be able to own a house due to inflation of prices and lacking wages. So you might want to buy a house now and lock your “payment”. If you do so, inflation will deplete your liability and you practically own the house for next to nothing. However, make sure you are able to pay taxes, insurance, etc. These are not fixed and will be raised since everyone will be trying to get their share of the pie (a phony pie mind you). And you do not want to loose the house for that reason.
Honestly things are changing so rapidly now, it is not even funny. Less than a year ago we were talking about raising interest rates and shrinking the FED’s balance sheet. Now we cut the rates 3 times and we are back in QE under the trick or REPO. Therefore, your particular situation has be fluid and you need to be able to reassess the situation as fast as “the data” changes. and the economic situation