|The Supply of housing stock has been out of sync with Demand for quite some time, which helps explain real estate’s resiliency through recessions and the current pandemic. Ultra-low interest rates and demographics are driving demand. Many see this as a “once in a lifetime” opportunity to secure a mortgage for less than 2%.
There’s an interesting book you may have read – Boom, Bust, and Echo. The book makes the case that forcasting the future of many things, such as real estate prices, is made easier by looking at the size of generations and the demands they place on the market as they age. A quick summary of the book can be found HERE.
Why is this important? It’s because we have the double whammy of a population that is living and staying in their homes longer, and a generation of highly educated (well-paid) young people buying their first homes. Demand is high, and will remain high for some time.
While some economists think the market will take care of itself, which it always seems to do, there are things governments can do to facilitate more supply. If anything, they shouldn’t try to restrict the number of homebuyers. We need more supply – governments at every level should look for ways to increase the stock of new homes. Instead of taking years, it should take months to approve new developments.
Scotiabank’s Jean-Francios Perrault recently penned an interesting article about why the government shouldn’t intervene. READ IT NOW He highlight’s the need to find ways to increase supply.