David Leonhart:
No, it’s not.
And Jeff, your explanation is exactly how markets work. However, the housing market is a strange market where psychology plays a huge role. So, a lot of people say they don’t want to accept a house below a certain price. Perhaps they are considering the purchase price and adding the cost of all the repairs and renovations that have been done, or maybe they are just rounding up the numbers.
But we’ve all done this ourselves, or someone in our family has done it. They said, “I don’t want him to receive less than $350,000 or he doesn’t want to receive less than $850,000 for their house.”
So when they don’t find demand for the home they want, when they don’t get the offer they want, they take their home off the market and look to put it back on later. As a result, housing has a truly artificial quality, with prices not falling to match the decline in demand.
And that’s where we are now. This means that anyone looking to buy a home right now is in the worst possible situation. Interest rates have risen considerably, but prices have not fallen. And to actually buy a house, you have to pay a lot of money. And that’s exactly why for many people in the Northeast, the West Coast, and major markets like Atlanta and Dallas, renting makes so much sense in the short to medium term, although again, not forever. Such a place.