They said one of the problems with building catching up with demand is they just can’t get the workers, well if you have to pay a lot more for the workers that’s gotta affect the price of the house that’s exactly right and what they’re gonna try to do, is if there’s costs are going up… they’re gonna try to increase the price of the home but what we’re seeing now is that there’s some frictions now where you don’t have as much pricing power because prices have exceeded income to such an extreme.
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One of the things that we look at is new home prices versus existing home prices throughout the recovery and and the story is actually very interesting the ratio between new home prices existing home prices, got two very very high levels builders.
Were trying to build to the areas where they had pricing power more of the luxury homes as they’re moving down as they don’t have as much pricing power you’re gonna see those ratios come down and it’s not going to be as attractive.
Neela you mentioned sort of a backstop of government help to sort of jumpstart the housing market as well what in particular really stands out to you in terms of help from the government, I think it’s really the local government it’s regulation we know that zoning costs the fact that a lot of these cities are zone single-family really pushes up the cost of building a house but moreover it’s also tied to these macro issues that the market as a whole is struggling with tariffs impact housing.
What we’ve seen in terms of lumber and steel tariffs have increased the price of new construction immigration affects housing because a lot of construction workers come from other countries and Mexico the fact that we don’t have short term visas in this country to draw in that labor and and lower the price of building a home in this country… so this is a global market even for the most domestic of assets which is a which is a house and so it is part and parcel with all the other policy initiatives that are weighing on stock markets right now and that’s definitely sort of a structural view versus short term 30 year mortgage rates have been lower.