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Old Posted Mar 28, 2022, 12:54 PM
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Originally Posted by llamaorama View Post
I can only imagine that for high cost cities, the answer would have to be reduced household sizes and fewer children and roommates, right? It wouldn't make any sense for home prices and rent to be sky high if there was no demand, right? And there would no across-the-board housing shortage if cities were getting less dense in terms of households.

There's probably a point where these types of declines in otherwise healthy cities will slow or stop. Once most of the old building stock turns over.
A lot of the increase in housing prices and increased housing demand is from increased monetary supply, and increased forced savings from not commuting and staying home. Savings rates skyrocketed during the pandemic which caused people to suddenly all at once have downpayments for their first house. And predictably, when 4-5 times as many people than normal all go out to buy their first home at the same time.. well..

Same thing with household creation - households suddenly had a lot more money from saving and government programs.. many probably decided that they could afford to live on their own and just like that, many new households were formed, needing more housing units.

COVID is a massive shock to the entire economic system, and we can see ripples of this through almost everything from car shortages, inflation, housing shortages, etc. Consumer demand and spending patterns shifted massively, essentially overnight. The market has to play catchup.