Real Estate Watch: No, there isn’t a housing bubble? – The Island Now: Business
Is there a Bubble in Housing? Absolutely Not!
Everything in the world, for the most part is supply and demand economics.
When one has a reduced supply, which is what we have at the current moment and a greater demand, that is not able to be satisfied, you have pressure on the current smaller inventory, to increase in price and existing not for sale property to increase in value.
However, seven to nine years ago, as the market was crashing and supply was increasing and demand was waning and prices followed suit, going lower; as well as existing home’s values.
Building permits also came to a screeching halt throughout the country, because of the lack of demand and tightened money supply and lending requirements.
Because of all these changing variables it might take 20 years and more, to even come close to satisfying current and future demand.
The greatest demand is coming from the Millenials, who were born between 1982 and 2000, and who number approximately 83.1 million as noted in the most recent U.S. census.
The continued increase in the Hispanics and Asian populations (non-white) and those under 65 and over (13 percent) (expected to increase to 20 percent by 2050 and the upwardly mobile in incomes, and those that have been living at home or in rentals, saving more and more money for a down payment to enter the home market to grab a piece of the “American Dream.”
The pressure on prices to increase has no end in sight. There will also be shifts in population trends and movements due to higher prices, taxes, jobs etc that will also have an impact on supply.
Population increases of 42 percent in the U.S., are predicted for the age groups 15-64 between 2000-2050, and reduction of those populations; 10 percent in China, 25 percent in Europe, 30 percent in South Korean and 40 percent in Japan.
It is how fast the builders can catch up with the ever expanding demand over the last five years that will determine when and if the next bubble will come to pass.
Of course there are always exceptions to the rule of supply and demand, if some U.S. or global event occurs to squash the current demand.
The huge question arises as to whether we will continue to spend and borrow and our huge debts now and in the future will continue to rise; will have some kind of effect on housing market based on higher interest rates.
Right now, it isn’t happening. If we raise interest rates too much that will slow the housing market, as well as everything else that is tied to it; however, if we keep them too low, that is not helpful to all involved and dependent on a return on their fixed incomes.
Dammed if you do and dammed if we don’t. It is a perfect storm, low interest rates, low supply of housing and higher demand, and I am hoping for continued positive outcomes going forward, but I am not totally 100 percent sure!
The problem with Long Island, especially in Nassau County, is the lack of buildable land to satisfy the ever increasing demand.
Even Suffolk County, with a lot more usable land to build on, is ever increasingly being grabbed up and held in a land trust, to keep any building from happening.
But again, the water supply will become an ever increasing major issue on the expansion of any future construction, as was mentioned in last weeks article.
All these facts point to the lack of supply in the future and the increase in prices in Long Island and many other areas around the U.S.
However, will many areas of Long Island become so expensive that only the rich and super wealthy be able to live here?
Lastly, what is also keeping our bubble in check, is the fact that more people are leaving New York.
Our children, family and friends continue to leave as they have been over the years, since the lack of reasonable housing will continue to force them to find other venues and move where it is more affordable.