Mortgage demand picking up does come at a price
My biggest concern for housing in the years 2020-2024 was that if the demographic push in demand picks up and total home sales get over 6.2 million, we could be at risk of housing inventory falling to such low levels that I would have to categorize this housing market as unhealthy. 2020 and 2021 easily each have over 6.2 million new and existing home sales combined.
This type of sales growth — which couldn’t happen from 2008-2019, as I have often stated — is coming with a hefty price tag. We can see that inventory falling to such low levels has created unhealthy home-price growth in both 2020 and 2021. While the rate of growth of home prices is cooling off (the S&P CoreLogic Case-Shiller Home Price Index typically lags), it’s still at a very unhealthy level for me. This is all about housing inventory collapsing to all-time lows in 2020-2021.
While I didn’t believe we could start 2022 at a new all-time low for housing inventory, this can’t be ruled out any longer. I honestly believed this would not be the case in 2022, but I am getting nervous. A few months ago, I wrote that falling inventory was one of the biggest risks to the housing market.
