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While real estate brokers and agents face the lowest level of home sales in nearly 30 years, home builders recently recorded their best performance since the Great Recession of 2008. Compared to 2019, home builders in 2023 had 40% more inventory. In contrast, the existing-home inventory in established neighborhoods in 2023 saw 40% fewer listings vis-à-vis 2019. That’s why lingering multiple offers have continued and home prices keep setting new record highs.
Welcoming news for buyers is that inventory is finally rising. There were 15% more listings this spring than a year ago. But home sales have not increased—at least not yet. Stubbornly higher mortgage rates have hindered affordability.
Calming consumer price inflation, from the cyclical peak of 9% two years ago to a 3.3% rise in May, will help the Fed to move away from its high restrictive interest rate policy over time.
To better assure that the incoming supply of homes is for owner occupants, some states are considering policies to push back against Wall Street–funded institutional investors. An excise tax or non-deductibility of interest expense is being considered for big players—say those buying 200 or more single-family rental properties.
Not everyone can or desires to own a home. But the country should abhor the prospect of transitioning to a renter nation. A majority renter society leads to bad policies, such as rent control. Some extreme activists seek no-eviction policies, even in scenarios where rents are not being paid. A better policy for those in need is a rental subsidy—just as hunger is best addressed with food stamps, not food price controls. One has only to look to Venezuela, where similar policies have contributed to an ongoing economic crisis.
