Why the Housing Market Isn't Crashing

In Episode 201, we analyze the U.S. housing market, addressing concerns about a potential bubble and debunking common misconceptions. Drawing from newly released home equity data and demographic studies. Quinton presents statistics, including the $17.6 trillion in U.S. home equity and the fact that 99% of homeowners have positive equity. The episode explores homeownership rates across different generations, from Baby Boomers to Gen Z, and examines the pent-up demand for housing, particularly among millennials. Together we analyze the potential impact of 25 million new homebuyers entering the market and compares current conditions to those preceding the 2008 crash.. He also addresses concerns about negative equity and regional market variations, emphasizing the importance of supply and demand dynamics. Throughout the episode, Quinton provides listeners with a comprehensive understanding of why fears of a housing bubble may be unfounded, offering valuable insights for both current homeowners and potential buyers.

[00:00] - Introduction and episode recap
[01:22] - U.S. home equity data overview
[02:55] - Demographic studies impact on housing
[06:17] - Generational homeownership rates
[10:25] - Pent-up demand among millennials and Gen Z
[13:16] - Current market vs. 2008 crash conditions
[14:55] - Supply and demand in housing market

______________________

Connect with us:

Please subscribe, like, and leave a comment to let us know you want to keep the content coming!

[channelpink]

Assuming all the millennials who want to buy can afford any of the "low supply" to begin with, is flawed IMO. People can hold on to this "low supply" all they want. If the majority of the buyers are only fighting over the lower priced half of the low supply, the higher priced homes are going to have to come down with it or sit longer and longer on the market.

[MrAustanian]

The topic is intriguing, but the data selection undermines the conclusions. To assess if the market is in a bubble, current equity figures showing few underwater homeowners are inadequate. Similarly, using raw population data to gauge household demand is misleading—like asking high schoolers if they'd like a Porsche 911 Turbo, when almost no students have the means to acquire one. A better approach would compare mortgage payments across various housing prices with the portion of the population that can afford those payments. For example, a median household can afford a $420K mortgage at 3%, but only $300K at 6%, creating a financial barrier for many to upgrade homes without substantial equity. This supply squeeze inflates home values artificially, and will persist unless job losses force more homeowners to sell.

[frankrizzo]

Why in your example do you not account for the baby boomers dying? They are dying at a rate of 2.6 million a year, which is expected to increase to around 4 million a year by 2037. If they have a 74% homeowner rate, then even if we use a 3 million a year death rate that will be 2.2 million homes a year. Now add in the 1.4 million homes a year we are building, you will be way over your 25 millions homes you estimate needed. This also doesn't account for deaths from people older than the boomers.

[a]

I have been waiting for the housing cost bobble to burst since year 2000... Already then it had been going up 10% every year for 15 years or so here. And since then it has been going up up and more up and we had no crash in 2008.