The US Real Estate Bubble

Where are we at with residential home prices? Are home prices headed higher? Are rent prices going to drop? Ken breaks it all down by reviewing three components of what is driving the market and makes some predictions on the trends going forward.

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⏰ Timestamps ⏰:
0:00 Introduction - 3 Market Components
0:34 Historic Homeownership v Rental
2:06 Population Growth
2:32 New Construction
3:14 The Market going forward Predictions & Trends

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ABOUT KEN:
Ken is the author of the bestselling books The ABC’s of Real Estate Investing, The Advanced Guide to Real Estate Investing, The ABC’s of Property Management, and has an upcoming book: "ABCs of Buying Rental Property: How You Can Achieve Financial Freedom in Five Years." Ken is a Rich Dad Advisor.

With over two decades of experience in real estate investing, Ken McElroy is passionate about sharing the good life by helping real estate investors grow and prosper. This channel is a place for Ken to discuss numerous topics connected to real estate investing, including finance, budgeting, the entrepreneur mindset, and creating passive income.

Ken offers a wealth of personal experiences, practical advice, success stories, and even some informative setbacks, all presented here to educate and inspire. Whether you’re a new or seasoned investor, the information and resources on this channel will set you on a path where you and your investments can thrive.

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#kenmcelroy #realestate #HousingBubble

For further information on this topic check out these links:

Nov 18, 2021 — According to the NAR, single-family home construction has lagged so dramatically that we're now facing a 5.5 million home shortage. And if you ...

Oct 27, 2021 — Housing prices are surging to new records with no end in sight. They're being fueled by historically low interest rates -- but also ...

Aug 17, 2021 — They find evidence that the price surge in the 2000s was indeed a bubble, which serves as a scary reminder that the housing market can go wild ...

Sep 2, 2021 — U.S. home prices have climbed at a record pace during the pandemic, leading some to worry about a potential housing bubble forming.

Jun 7, 2021 — The case against seeing today's market as a housing bubble. The case against calling this a bubble is pretty straightforward. Prices are rising ...

[threeone]

There is always a shortage of homes during a housing bubble. The same thing was true in 2008. Then suddenly there were empty homes everywhere.

[lberhold]

If you read the 5.5 million shortage study you'll not only see it's outdated, but ignores several variables. The new units being built is considerably above population growth. The USA population growth has been trending downward and is near stagnation.

[johnmerlino]

Hi Ken, I have two more that I think you missed. 1. The shift to 'Remote Working' from the Office, 2. Baby Boomers (98m with 80% owning homes = 75m homes) will be giving up their homes over time. Both of these will affect your dynamics of home supply.

[crruzzzer]

I live in the Phoenix area. I mentioned to a friend that I may consider selling, but wasn't sure.
One of his relatives and an aquantance asked if they could possibly have first dibs on making an offer!!! I didn't even make a suggestion on price. Wow, that makes me afraid to sell because I can't find anything else I may like.
I'll just stay in my home and forget about all the hassle.

[LivinginBirminghamAlabama]

Been enjoying your videos, really amazing content

[uskr]

When the prices were affordable last year, you said it was not the right time to buy and wait for the market to crash. And we listened to you and waited. Now when the prices are skyrocketing, you are saying it is a good idea to own property instead of paying the high rents. What is your comment on this?

[jfausset]

When I see anyone holding lots of real estate title their video as a question about the RE bubble popping, 99% of the time I can fast forward to the 3/4 mark of the video only to hear them wrap up their points defending RE prices, saying the bubble will go on forever. As long as you’ve got yours, right?

[Jknold]

With those numbers in mind; if construction cost are stabilized (haven't looked into that yet) isn't building rental units a viable option in this market? Young buyers are moving away from expensive real estate and millennial's aren't as attached to homeownership as their parents were, seems like building rentals is a good option. Any thoughts?

[amandagarcia]

As of the 2020 census there were 121 million households and 141 mil housing units. How does 121 mil - 141 mil = 5 mil housing shortage? Even accounting for second homes and Airbnb’s… Construction was down for several years but that was because it has taken years to absorb the excess built in the last bubble. Population growth rate is at the lowest ever due to low immig and birth rates, millennials marrying later in life, etc. New construction is up again by a lot (as slow as completions may be) and there is a lot of remodeling lately so old units that would normally be abandoned or razed are being remodeled and kept in the housing stock. There’s no housing shortage. This is a FOMO bubble. People that were planning to buy 2-3 yrs from now are instead buying now. Eventually that will depress demand in the next 2-3 yrs.

[toeachitsown]

But... if inventory is so low, why in 2019 homes in my area cost half the price and sat for sale for 6 months or more?

[zunetrucker]

Phoenix wages don’t support these real estate prices

[dawafflegangster]

Thank you so much I miss the whiteboard lectures 💪❤💪❤💪❤💪

[DisruptorsPodcast]

Love the video. What would be your advice for 2022 Ken?

[fernandoboero]

Supply chain issue will continue for 10-20 years till we (if we have the resolve) begin producing our own products. With continued shortages, renters will increase & home construction will stagnate.

[jermon]

These newly high property taxes coming from these artificial inflated home prices. Are going to catch a lot of folks off guard. The only new construction I've seen is on the higher end side. For the already wealthy and newly made millionaire's.

[Sam-odxb]

How about foreclosures, air b and b ?

[bestvideosever]

what about real income growth? CPI ? and most important taxations on the Real Estate? Long term is more profitalbe to invest in stock market

[joeacquavella]

I hear this one sided explanation often on YouTube. This video only partly explains the recent rise in home prices. Yes, there are fundamentals driving up home prices but it misses a bigger factor namely the fed and QE which has artificially keep mortgage rates low (via MBS purchases of $80 billion/month) which then created speculation in many of the growth markets (i.e. FOMO). What the fed giveth the fed taketh away! lol

[Red]

Every president promotes home ownership. In May 1995, President Bill Clinton released the National Homeownership Strategy. Bush and obama said the same. Why? I view home ownership as a rental as the landlord is not only the bank but the government in terms of property tax. In Texas, property tax approximates 3% and that means you are giving the county your entire home over a 33 year period. Living in a home you own over a lifetime means you not only pay the lender around 3 times the purchase price with interest plus tax over time. So it is clearly good for government for you to own your home. Not to mention the commissions you spend or 10% every time you sell. Now add the upgrades like new carpeting and new major appliances. And those new leather living room furnitures plus their taxes to the government. It is not my idea for an american dream. The alternative is renting, which is the same as buying because you end up paying a whole lot both ways. In regards to your video, Ken, your three components are indeed correct! My opinion is to also buy not rent because the CPI is more than the i-rate for borrowing. Paying $2500 mortgage is offset by $4000 price inflation. So it pays to borrow in this specific case. The goal is not profit as much as it is to maintain your buying power over time. Our Arizona home increased from $300 to $500 in three years. Yet similar homes that were $300k and all now $500 too. So nothing gained but also nothing lost.

[diegoarcila]

Ken always dropping great knowledge!
Thank you sir for your guidance