China implemented its population control policy, commonly known as the “One-Child Policy,” in the late 1970s to address concerns regarding overpopulation and its impact on resources, economic development, and social stability.
The policy aimed to slow down population growth and alleviate strain on limited resources.
However, the approach had several negative effects. It led to a gender imbalance due to a preference for male children, resulting in a disproportionate number of men in society. Additionally, the policy gave rise to a rapidly aging population, which strained social welfare systems and created challenges in providing adequate healthcare for the elderly.
While the policy initially achieved its goal of reducing population growth, it resulted in unforeseen social, demographic, and human rights consequences.
So why on earth am I bringing up population control in China and how does this have to do with housing?
I will let you all in on potentially the LARGEST factor that influences the real estate market…That NOBODY ever discusses.
Population growth impacts housing.
We had Barry Habib, who is the CEO of MBS Highway, present at a recent event I attended, and he shared some incredible insight into population & inventory.
Here is a look at the number of home completions over the last 20 years vs population.
I showed this graph to my 11 year old son and he immediately understood the dilemma we face in America with housing. Too many people chasing too few goods (single-family homes).
The next two slides blew me away:
If I told you that there are 34 million more people living in the US today vs 2008 & those people have ¼ of the inventory to choose from, you would not have to look at any more data to confidently say that home prices have gone up and will continue to go up until this balances out.
Plain & Simple.
So why do people have such a hard time answering the question of what do you think home prices will do over the next 5-10 years?
The answer could not be more blatantly obvious for single-family homes (Multi-family & office space commercial property is a MUCH more complicated answer.
Housing is an easy answer.
Home prices will continue to slowly go up by 3-5% for most of the US in 2024 and they WILL go up when rates come down.
Nobody has or can show me data that would suggest otherwise.
The better question you should be asking yourself is how can I figure out a way to buy as many single-family homes as I can reasonably afford this year and each year moving forward?
We are facing an incredibly challenging real estate market when you consider record-low inventory, high prices and high mortgage rates. Finding properties that pass our screening criteria, is becoming increasingly difficult.
This is why we are SOLD OUT of our turnkey inventory.
Now that you know just how imbalanced supply & demand is, I will remind you that high interest rates are your best friend.
The interest rates are the ONLY thing keeping prices at bay. If you think mortgage rates will be coming down later this year, to put this gently, YOU ARE NOT ALONE. For every 1% drop in mortgage rates, 5 MILLION more qualified buyers enter the market to compete against on price.
Prediction:
There is significant pent up demand right now for housing. While many people would prefer to hang onto their 3% interest rates, the fact is many will be forced to sell and buy another home. When the dam breaks, and interest rates come down even another .5% from today’s rates, I do believe many parts of the Country (especially the Southeastern markets will be in for double digit appreciation).
Thankfully the US decided not to drink the same kool-aid that China did in the 70’s…Now it is up to you to actually take advantage of the incredible opportunity to own real estate and utilize it to create wealth…And pass down those properties to those future babies and grandbabies that are yet to come.
Multiply and replenish folks!
BJ
