Featured PropertiesInvesting In Real EstateStatistics October 12, 2019

Why Are Home Prices Still Going Up?

see_no_evil_800_clr_13161.pngWhy Are Home Prices Still Going Up?

New home construction is failing to keep pace. Yes, you see parts of Utah like Herriman being a mass of building but in the overall picture it isn’t filling the need. Utah experienced several years of benign construction numbers and that is hurting us. The economy is booming and people are moving here, adding to the problem. Much of the new construction is for apartments. There is a shortage of subs for the contractors to draw from. Building and land departments are often not an easy task to get approvals from. The environment for small builders or startup builders with the big guys.

A smaller but contributing factor is the aging housing stock. As homes age they will either need to be torn down or rehabbed. Some get torn d0wn adding to the problem.

Demographics: The Millennials have overtaken baby boomers as the largest U S adult population and they are now buying homes.

Housing starts in the millions in 2019:  1.3 million. 50 year average: 1.6 million.

Number of Millennials in 2019: 7.3  million. Number of homes built in 219: 7.2 million.

Homeowners are staying put longer.

Homes turned into rentals. The investors are busy buying homes to rent. If you had a couple of million dollars to spend on real estate where would you go? You could buy single family to rent out or go to a multi-family. My experience is that the duplex to fourplex market is full of fixers. If you had 5 million you could diversify into a few commercial pieces. Still you have the management issues. I have concluded that the best bet is to purchase single family residences. I am not alone on this which is adding to the problem of availability.

The demand is a few years from slowing down. If you are a potential buyer it isn’t time to be hesitant. We could even become a market like Seattle where the prices bolted so high we can’t afford to move back, and that’s not making my wife happy.

Why Are Home Prices Still Going Up?

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