Plenty of people out there buy houses for cash, spruce them up, and sell them for profit to extract some of the equity inherent in real property. Over time, they collectively push up the perceived value by force, and occasionally, the people who are the ultimate source of that equity, the ones looking to buy a permanent home, will stop buying.
There’s been a chunk of time recently, a decade or maybe more, where those permanent home seekers, the true source of the equity, haven’t been buying property. COVID exasperated the issue, because the flippers went fucking crazy for a couple years and inflated the amount of non-homes. Now they want their equity back out, but nobody who wants an actual home is looking to buy one because there isn’t enough value for them.
So prices have to come down before the actual source of equity starts buying again. The bubble has to deflate some.
Again, the entirety of this statement is simply my personal opinion, so grain of salt, but this is what pure logic and critical thinking suggests is the true mechanism :)
My opinion is that it’s investors.
Plenty of people out there buy houses for cash, spruce them up, and sell them for profit to extract some of the equity inherent in real property. Over time, they collectively push up the perceived value by force, and occasionally, the people who are the ultimate source of that equity, the ones looking to buy a permanent home, will stop buying.
There’s been a chunk of time recently, a decade or maybe more, where those permanent home seekers, the true source of the equity, haven’t been buying property. COVID exasperated the issue, because the flippers went fucking crazy for a couple years and inflated the amount of non-homes. Now they want their equity back out, but nobody who wants an actual home is looking to buy one because there isn’t enough value for them.
So prices have to come down before the actual source of equity starts buying again. The bubble has to deflate some.
Again, the entirety of this statement is simply my personal opinion, so grain of salt, but this is what pure logic and critical thinking suggests is the true mechanism :)