The hot housing market has been attributed to historically low-interest rates, Millennials reaching homebuying age, and a desire for spacious living created by the pandemic.
Across the industry, experts agree that all of this has been exacerbated by a shortage of houses that started with underbuilding in the aftermath of the 2008 financial crisis.
Everyone except Ivy Zelman, the housing analyst who foresaw the financial crisis in 2005. In a report, her firm, Zelman and Associates, claims that housing demand is overblown and that the country is already on a path to building too many houses.
?The perception that housing is drastically undersupplied and that a strong demographic picture lies ahead is creating a false sense of security,?? the report reads.
?By our math, both single-family and multi-family production are already ahead of normalized demand and estimates of a housing deficit are grossly exaggerated.??
But Zelman says any predictions of real demand are flawed because there are so many new types of buyers in the market. Private equity firms are buying and building properties to rent out. iBuyers upset the traditional buying process by using algorithms to make purchases quickly.
In this landscape, Zelman argues, making claims of future demand is a bad bet. If the market continues building at its current rate, rising mortgage rates and an aging population may coincide with an oversupply of homes, leaving inventory unsold.