doctorhousingbubble.com / Dr. Housing Bubble / August 28th, 2016
Last week I was driving throughout the Inland Empire and one thing becomes rather apparent. There is a ton of building out in the Inland Empire – this applies to work on freeways, new housing communities, and new commercial development. Also, traffic is a nightmare. Westside traffic is also horrendous. There are many people that make the commuting odyssey each day from the Inland Empire into L.A. or O.C. and that commute is only going to get worse from what I was seeing. I was also in the Bay Area recently and prices there defy gravity. In the Inland Empire you can get a McMansion while in the Bay Area you will get a crap shack for one million dollars if you are lucky. It really boils down to a lack of housing inventory and uncertainty that has made builders anxious since the housing bubble is fresh in their collective memories. But alas, the public is drawn to housing like moths to the light. Being stuck in mind crushing traffic for a brief period only highlights that people are willing to sacrifice quality of life for a piece of the American Dream.
Housing inventory, where art thou?
Home prices have been moving steadily up for a few years now and typically when prices start moving up and inventory is tight, builders get building even if this means converting apartments into condos in areas where NIMBYism rules the day. That is simply not the case this time around (not in mass and only now does it seem like building is accelerating). Builders look at demographics and realize that renting is going to be the bigger trend moving forward.