| > Not a bubble because for the most part people are buying homes that they can pay the mortgage on. I think you're right that this won't be an exact repeat of 2010 — that era was just crazy for anyone who understands financial responsibility, more like a precursor to the cryptocurrency number-goes-up salesbros now than the current market — but there are some worrying factors I'd consider before buying. I don't think most of these are national in impact but I'd expect some big regional shifts which could be quite hard to handle for some cities, especially if they haven't been doing a good job on their finances already. 1. A lot of those high prices are anchored on demand in certain areas. If younger generations are successful in getting zoning rules changed to allow density, that can add a lot of competition and there are many hopeful buyers who would prefer, say, a new apartment/condo in a city with many things to do to an older (higher maintenance) house in the suburbs. I think this one is long-term enough that most buyers will be bailed out by inflation but it could at the least prove a major upset for the people who are skimping on things like retirement in the hopes that they'll get a massive equity boom like their parents did. 2. Remote work is here to stay — not 100% but enough to cause shifts in buying habits. 3. Most American home buying is predicated on cheap fossil fuels. If that inflation spike eventually leads to higher pay, this helps on mortgages but in the meantime it puts a lot of strain on anyone who can't just soak up their commute and heating costing a whole multiple of what they previously did. Expect a bunch of SUVs on the used market if the current spike lasts for very long, just like in 2010. That cuts down the number of buyers sharply for outer suburbs. 4. Climate change isn't going away: again, not a national bubble but there are areas (e.g. South Florida) with a lot very pricey real-estate which seems unlikely to be able to maintain that value. That includes things like flood insurance, coastal erosion, etc. 5. The classic suburban model isn't really sustainable: the initial work by developers and tax rates set when maintenance is the cheapest are going to require hefty rate increases as infrastructure ages or needs to be adapted for climate change, but the more people are paying for their houses the more they're going to oppose things like property tax increases or be unable to pay them. |
This is one thing that could start a collapse and it is why many real estate companies are pushing a "office work is needed for collaboration" narrative. The real estate market for offices
https://www.nar.realtor/commercial-real-estate-market-trends...
The commercial real estate market is recovering but remains weak compared to conditions before the COVID-19 pandemic, according to NAR commercial members who responded to the 2021 Q1 Commercial Real Estate Quarterly Market Survey and industry data.