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Animal Spirits Spotted In Homebuilder Sentiment
The animal spirits are stirring.
Hot on the heels of data showing the biggest month-to-month percen
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“But you can’t dig out of a structural housing shortage in the space of a few months and demographics lean strongly in the direction of pent up demand.”
This is going to be an issue for at least a couple more decades. According to 2019 census data (so it is a bit dated), two-thirds of homeowners were 50 or older while they accounted for slightly under half of the overall population. It makes sense that older people would make up a higher proportion of homeowners relative to the overall population, but to your point, the generations coming up behind them are as large or larger than the baby boomer generation and owning your house is still a big part of the American dream.
On top of that, investors have been very active in the market the last couple years (although rising interest rates may have caused them to pull back more than non-investors), construction isn’t getting any more efficient, and NIMBYism is still a huge problem in many places where people would like to live. Oh yeah, and the places people have been building like Florida and Texas are highly susceptible to climate change. Frankly, more and more people are going to be stuck renting and/or cramming more people into smaller spaces. Any price corrections from here on out will be minimal for the foreseeable future.
But hey, the metaverse can theoretically offer unlimited space. Just need to find a closet with enough space to accommodate basic physical movement.
The sad truth is that ‘we’ won’t allow affordable housing, in a broad sense. While in low income localities such a thing is desirable, in most areas of the US ever high(er) property values are desirable.
When property values fall, whether it’s new supply or curbed demand, home owners (or investment institutions) will have something to ‘say’ about it through their votes or donation dollars.
When I was a kid, growing up in a blue-collar, middle class neighborhood, a big house was 1500 square feet…our house was 1200 square feet for a family of five.
My kids have homes ranging from mid 2000s to 4000s. There’s no way they would ever consider living in the type of house that I grew up in. Maybe that attitude plays a part in our current situation. The only time I see the “younger generation” settling for a small house is when it’s in a highly desirable neighborhood and square footage costs are astronomical.
By the way, I live in Texas and climate change hasn’t arrived here yet.
It’s still hot to really hot from late May until late October. It’s been that way my whole life.