A Word About Prices by Bill Roberts

A word about prices and what is happening in the good ol' United

States of America.

Everybody knows home prices are going up. They are going up 10 -

20% year over year.

Why?

Well, the simple answer is lack of inventory. There are very few NEW

houses being built.

You see statistics on the TV that say housing starts are up. What they

don't say is that most of them are for apartments.

The Residential Rental Business is good. Home ownership as a

percentage of the population is DOWN. But the number of new family

units (households) is UP. This is mostly Millennials that are setting up

their own household. They are the largest segment of the population

and  THEY ARE RENTERS.

Even older generations are mostly renters because either their credit

sucks, they don't have a down payment, maybe they had a foreclosure,

and maybe maybe they lost their job. Or, they have been priced out of

the market.

There is a trend to convert ALL of us into renters. The housing supply

is dwindling. Maybe they are "plowing them under" like in Detroit, or

the Wall Street types are buying up all the foreclosures and turning

them into rentals, or just the normal attrition caused by Fire , Flood, or

Obsolescence is reducing the supply of houses.

There just aren't enough houses to go around, so the PRICE gets bid

up on the ones that are available. And they are being "priced" out of

the reach of most of us.

This could all be the result of a CONSPIRACY or simply SUPPLY AND

DEMAND.

The fact that lenders are making it more difficult to qualify for a loan

might be a natural reaction to the excesses of the early 2000s (2001 -

2006), or a plot to make sure that the HEDGE FUNDS that are buying

up all the houses have plenty of renters.

Your guess is as good as mine.

But one thing is for sure. The middle class is being squeezed. Wages

(that is REAL WAGES) haven't gone up in years. The number of good,

well-paying jobs is declining.

More people are being forced into marginal jobs. There is a push to

raise the minimum wage to $15. This is because more people will

have to live on the wages from a low-paying job. But understand this:

these people will NEVER be able to afford a house.

You would think that with house prices returning to the heady days of

2005 - 2006 that home builders would be going all out to build more

houses. It should be a boom.

But they aren't. They are just building a few here and there. NO

BOOM.

Why?

Well, simply because their economists tell them that they wouldn't be

able to sell ALL of the houses.

The ACTUAL DEMAND for houses is down. Regardless of what you

may think.

With Baby Boomers entering their 70s Florida home builders should be

going crazy. Yes, there is some activity, but it doesn't keep up with the

flood of Boomers.

With Millennials entering their prime working years every RIGHT-

TO-WORK state should be going crazy also.

But I think I am the only one going crazy.

There is something really wrong with our economy.

PRICES are ultimately a result of Supply and Demand.

DEMAND has driven PRICES sky high. This should trigger SUPPLY.

But the homebuilders aren't building more houses. There is NOT

enough DEMAND.

Huh? This is an economic anomaly with political roots. I sure hope it

gets fixed. Soon.

PRICES? Now you know what I know about prices (or some of it

anyway).