Is the housing market going to crash in 2021? I don’t think it is. I’m a mortgage broker, I’m a real estate broker, and I’m a real estate investor. So, I’m keeping track of the market pretty closely. I’m going share you with you 5 reasons why I think the real estate market is going to stay healthy in 2021 and the foreseeable future.
Okay, reason number 1, I’m going to have to read this, the California Department of Housing and Community Development says the State of California is going to need about 1.8 million new housing products by 2025. That’s a big deal. There is just not enough inventory. And it’s just supply and demand. There’s way more demand than there is supply. There’s a lot. There’s a big lack of inventory, and we’re struggling to find houses. That’s why in the last year, I’m recording this in May of 2021, and last year, there’s just been nothing to buy. And a lot of its COVID. A lot of it is COVID. But a lot of it is there’s just a lack of inventory. And that’s why housing prices have just shot up this last year.
Another reason there’s a lack of inventory is seniors are just opting to age in place now. They’re just not moving into senior assisted living. A lot of its COVID. A lot of it is just what’s happened to COVID. And in the future, I think we’re going to see a lot more seniors just staying where they are. And so, that really affects the housing inventory. Because that was a big part of the natural cycle of housing is when seniors moved into assisted living or moved in with their kids. That created a new supply for new homeowners. And that’s just not there anymore.
Reason number 2 is builders just start building to keep up for the supply. And there’s 3 reasons for that. One is it’s just expensive now. It’s expensive to build. The cost of lumber is skyrocketing. And a lot of that’s COVID. But it’s just a lot more expensive to build homes these days. Another reason is there’s just no lots to build. Especially in metropolitan areas, the amount of buildable lots is decreased greatly. And so, the lots that there are, are expensive, and it just doesn’t make sense for builders to build a lot. And the other reason is increased regulation. Counties and cities have increased the regulation. So, it’s increased the cost of building and the length of time it cost to build, I mean, it takes to build the whole. So, because of those 3 reasons, builders just aren’t building as much. We just can’t keep up.
Reason number 3 is because it’s not 2007. The big crash in 2007 was mainly because the financial institutions, the lenders, back in the day were giving loans out to anybody. I mean, you could just fog a mirror and get a loan. You didn’t really need to prove your income. They would just put that in the application, and you would get a home. So, I mean, I heard of maids making $30,000 a year buying $600,000 homes. Just didn’t make sense. They had a lot of teaser rates, which meant you had a fantastic interest rate for 5 years, and then it jumped up. And so, there are a lot of people lost their homes. And at the time, because of that there was a lot more homes for sale than buyers, and that’s why the market crashed. And because a lot of people lost their homes as well.
Number 4, we’re not going to see all the foreclosures that we did. And that kind of goes with number 3, mainly because people who are buying homes now can afford the home. They can afford the monthly payment. And the other reason is because home prices have shot up so much in the last 5, 6, 7 years that people have a lot of equity in their homes. So, they’re not in danger of losing their homes. Even if they lose their job or they have some big financial hits, there’ll be okay. They can refinance, they can sell the home and be okay. So, we’re not going to see all those foreclosures flooding the market like we saw in 2010, ‘11, ‘12 that really drove the home prices down. We’re not going to see that. So, I think home prices are going to be okay.
Reason number 5, people are still moving to California. You may have heard in the news recently the California lost one of its representatives. But it wasn’t because people are moving, more people are moving out and moving in. Actually, we had a neck gain a population. It was just because the States like Texas had a bigger net gain. And so, they took one of our representatives. There’s only 435 representatives. So, they divvy it out according to population. And if you compare Texas’s increase with ours, they had a bigger increase, so we lost one of ours. And going along with that, people are moving out of California, but it’s mostly people who can’t afford to live here. I mean, people who are moving to California, we call it the brain gain instead of brain drain, people are moving here can afford it. I mean, they’re moving here, because of tech. They’re moving here because they got a new job, a good new job. So, where people who are moving out really can’t afford it, people are moving in and can’t afford it. So, I don’t think it’s going to affect the housing market.
So, those are my 5 reasons, 5 reasons that I don’t think we’re going to have a housing crash. I don’t think prices are going to go up as much as they did last year between 2020 and 2021. It was just ridiculous. Hopefully, we’ll get closer to a normal market where there’s kind of an even divvy up of buyers and sellers. I don’t think it’s going to be the case, or I think there’s always going to be more buyers and sellers, and it’s just a supply and demand. There’s more demand than supply. So, that’s going to keep prices up. Hopefully, prices aren’t going to shoot up as much. Hopefully, they’ll just stay level or just go up slightly, and maybe they may dip down slightly. But housing crash is not going to happen. In my opinion, I don’t have a crystal ball, go figure, I’ve been wrong before, but all the data I see and all the articles and blogs and financial papers that I read on a weekly basis kind of are pointing to, it’s not going to happen. There might be some small changes. It might dip down a little bit. But on the whole, California’s housing market, and I think even the nation’s housing market, is going to stay very healthy.
So, that’s it. That’s my video. I hope you enjoyed it. If you’re watching on YouTube, please subscribe. Please make a comment. Please like this video. If you’re on YouTube or Instagram, go ahead and follow me and like this. And if you have any questions, put them in the comments. I’ll answer them and maybe I’ll make a video for your question if it’s good question, if it’s question that needs a little more time to answer. Hope you enjoyed it. My name is Jesse Rivera. I’m a mortgage broker, and I’m your first call if you’re going to buy a home. Thanks.
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My name is Jesse Rivera. I’m licensed in the State of California and I live and work in beautiful Long Beach, CA. I can do loans for the whole state of California, but I specialize in SoCal, especially Long Beach, Los Angeles County and Orange county.
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