Interesting analysis. Buyer behaviour definitely seems to reflect these observations.RxMills wrote: ↑ Hindsight is a wonderful thing.
The strength in the housing market seems to have been due to two things:
(1) Access to money
- extremely low interest rates, that may get even lower, giving everyone access to more cheap money
- most people, that can buy at today's prices, are doing as well as before or even better
- no one is talking about debt-load, and most know that the gov't will step in to help if the masses need it
(2) Desire a more COVID-compatible Home
- a little bigger space
- perhaps a less urban location, or a less congested urban life
Absent anything else, these could mean continued price support of the market.
Two things are currently absent from the market:
(1) A significant belief that our incomes required to support our monthly costs may be significantly diminished
- most of the current COVID economic causalities were not in a position to purchase a home of any kind in today's market
- no mass-layoffs/down-sizing (yet) for those with higher incomes
(2) My home may be worth significantly less in the future
- many had this belief in March/April, but once the market fully re-opened in June/July, high demand was there
- the opposite seams true now and most believe that prices will continue to rise
- no motivated selling
These beliefs will likely continue, absent any surprises or prolonged shocks to the economy. We'll see what unfolds in 2021. As 2020 financial results become disclosed, there may be significant cost-cutting. The Feds shocked the country with a $350B deficit. Now I'm hearing $450B and no one seems concerned. The misbelief is that all the govt high spending won't be needed after a vaccine. I think that's a misbelief as the natural economic markets won't be able to support themselves for a long time to come, absent monthly govt monetary interventions.
It is really concerning that both those who lead us and those who are being led seem to show little to no concern for fiscal responsibility. It is as if there is no concern for ever having to pay anything back. In previous times, we would hear reminders every so often from the government about not getting too leveraged and just being mindful of our personal spending for our own sakes. Today, it just seems like we can spend both as individuals and as governments at the maximum of our limits. I don't know where such confidence comes from, especially during a pandemic. I am not so sure it is good for anyone's mental health to be carrying an excessive debt load. JMHO