I wonder what’s going to happen to housing after the eviction moratoriums run their course.
Big Hoss
Well, it will be extended or there will be protests in the streets during a pandemic.
In my city, about a decade ago, a middle class life allowed you to afford healthcare, college for your kids and a very generous home. Today, people from the coasts showed up with $800k+ budget for a home in a market that averages $300k in my city. All of the sudden, owning a home is a luxury. Rates are so low, multiple cash offers competing for the same home, sellers have total control of the market. The pandemic made homes the new; office, gym, movie theatre, etc. Middle class suddenly got squeezed out in today’s market.
Check this fun fact out... 9% of our GDP is now from the housing market, and it’s still rising! The TOTAL business expenditures in this country (a productive segment of the economy) is also 9%. So when we have all these housing debt, and bank algorithms telling almost any buyer on the market “you can afford almost any house”, a non-productive asset of our economy through an asset bubble, it’s very alarming to say the least. 81% of all the inflation out there today is from housing, and the credit bonanza coupled with super low interest rates is skewed towards the rich and makes affordable housing more difficult for everyone else. And when the correction comes, the middle and lower class will be hurt even more.
I read a reputable article on this topic yesterday... 2 out of 5 millennials (majority who carry a historic student loans between them) said they will never own a home. A big shoe will drop sooner or later.