Lots of people are trying to claim this is a temporary supply issue. People are just not willing to sell yet, right?
That’s a silly argument. Most sellers soon become buyers. That’s a wash.
What’s happening is two-fold:
-
Nobody wants to live in an apartment anymore. So we have a grand shift. Apartment dwellers want starter homes. Starter home owners want to upsize, often to the suburbs. People with expensive homes in expensive cities want to have really nice homes in cheaper areas. So there is a shift from apartments all the way up the ladder.
-
The Fed still has its foot on the accelerator. More people can *afford* to buy with such low rates, so they’re trying. And investors want to increase their own portfolios at such low rates.
> When will supply pick back up?
Older people are already vaccinated in the US. As for builders, the supply chain problems are a result of something called “inflation”, which used to cause fear in the halls of the Federal Reserve. So there is no savior for supply on the horizon.
*Inventory* will pick up when potential sellers become actual sellers. That will happen when the market stabilizes, which will be a gradual process. They need to be confident that they can *buy* after they *sell*.
But that will mean extra *buyers* too. And even that much cannot happen until prices stabilize, which cannot happen until central banks raise interest rates.
In about 2 years, economists will realize that we needed fiscal stimulus backed by monetary policy, rather than monetary policy alone. The low interest rates have widened the wealth gap to the point where the future of capitalism is in question. This was a massive blunder.