What is driving the recent escalation in home values

1 Reply

Are we heading toward another RE crash. The value of my RE holding are certainly goes up rapidly and that should make me happy right. I'm feeling a little nervous right now. As an investor I am, for the most part, on the sidelines. Same feeling for the stock market as well.

Boy @Fred Cannon that is a big, big question.  Factors tied to the escalation in values would include

  • Decrease in listing availability 
  • Increase in buyer demand (at least in proportion to listing availability)
  • Interest rates being blissfully low
  • Builders being businesses that needed to hedge their bets early in the COVID mania and reduced new construction pace
  • Currently commodities needed for construction are significantly elevated over pre-COVID levels
  • The GOV is passing out cash like candy

All of these forces and a few others combine to create an up-and-to-the-right kind of housing market.  Stocks are a more nuanced and (to me) fear-inducing thing altogether.

The way out of our current real estate escalation (if it is in the cards) is inventory increase, debt getting more expensive, or buyer demand otherwise decreasing.  All are possible, but I'd bet that our government as a whole is opposed to negative growth in the real estate sector, so they'll probably just keep doing what they do.

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