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The Housing Market: Too Much Inventory or Not Enough?
The impending housing recession poses an interesting question – would we rather have too much housing inventory like we saw in 2008, or too little inventory like we have now? As a loan officer and realtor, I’d take the former. Here’s why:
I can compel and assist someone to buy a home. But I can’t compel builders to construct more houses faster. Given the choice, excess supply seems more manageable.
There is some encouraging news on the buyer side. A new law requires shell companies and anonymous LLCs to disclose ownership before purchasing property. While ostensibly focused on money laundering concerns, fewer all-cash vacuum buyers could ease inventory strains.
Economists argue we are approaching 2008 price bubble levels. Household formation slows while supply gradually recovers. This suggests we could see the type of inventory-rich correction I’d prefer to work within.
The definition of “family unit” and “moving out” is itself evolving, as practicality encourages more multi-generational households. The embrace of granny flats and accessory dwelling units reflects this trend.
In any case, the real estate business faces a reckoning. The pandemic, rate roller-coaster and inflation have upended assumptions. Strategies require rethinking, as the old playbook grows obsolete.
I estimate 90% of real estate and mortgage professionals are not truly prepared for the industry shifts already underway. Events in 2023 and beyond will further test their agility. Fortunately, change brings opportunities for those willing to adapt.
The next few years promise to reshape housing in ways few anticipate. But with the right mindset and skills, one can prosper in the new normal. I look forward to helping clients navigate the transition.
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