The Coming Real Estate Boom

The figure below is exactly what I have been saying all along.  Even those who are foreclosed upon will be living in houses. We are not building enough to meet demand. Not for the tens of millions we will be adding in the coming decades.  When it turns, it will turn hard.  

a. Rent will be more expensive than owning;

b. People will start opting for purchasing with pent-up demand.

c. Credit standards will loosen because mortgages will again be a great investment. 

d.  We will have to spend billions just to fix up the damage to vacant properties.

Read on: A working paper by Federal Reserve economists indicates that foreclosure does not force people to live in less desirable neighborhoods, lower-quality homes or more crowded conditions. Raven Molloy and Hui Shan conclude that “foreclosure does not impose an economic burden large enough to severely reduce housing consumption.” About 75 percent of borrowers who endured a foreclosure between 2006 and 2008 continued to live in single-family dwellings, with about 22 percent moving to multifamily housing. Source: American Banker

If only the government does not make it tougher by waiting until the last second (or worse) regarding extending the debt limits.


3 Responses to The Coming Real Estate Boom

  1. I think there is a lot of pent up demand in the housing market along with house repair (construction). Many people have been putting off home repair or just opting for quick fixes themselves, but eventually the work is going to need to be done.

    In terms of housing, people can only wait so long until they need housing and apartment rents adjust to meet current demand. The cycle will definitely shift; I just think the time table is longer than we had thought in 2009.

  2. markbrian says:

    The sad thing is that many will realize they should have bought after the opportunity has passed.

    Maybe it isn’t the right time for some people to buy a home. But for some, NOT buying a home when the time is right is also a mistake.

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