Attached is a link to an article from DS News. It features a writer from Capital Economics by the name of Paul Diggle. He offers excellent insight into the bank owned (REO – real estate owned) market where buyer have been purchasing distressed properties and renting them out. His theory is that the prices of the REO properties is rising so fast that soon this will no longer be profitable.
In the short term, I believe he is very accurate. However, he does not offer a longer term view. It is my opinion with the lack of construction that has occurred in the past 3 years and with less than a rosy prediction for new construction, we are headed for a housing shortage in less than 5 years. You will not find many economists making that prediction but housing experts are.
How can that be? We as a country are not shrinking in population. Between births and immigration (both legal and illegal) we continually see a .963% growth. That is over 3 million additional people per year. We are building less than 500,000 homes per year for the last 3 years. If one adds multi-family homes, we are adding another 350,000 units. It does not take an economist to see where this train is headed.
The country has bigger problems on the horizon but housing, particularly in urban areas will become a problem in the not so distant future.