SUPPLY VS DEMAND
The US real estate market remains red hot, driven by the cost of mortgage financing which is still near record lows and mainstream acceptance of remote working. The paradigm shift is changing how people can work and where they will live on a scale that is just now being recognized and understood.
The national Case Shiller Index calculated an 18% increase in pricing for 2021 with Goldman Sachs forecasting 16% for 2022 as a result of an under supplied housing market and increasing household formations. “Of all the shortages afflicting the U.S. economy, the housing shortage might last the longest” said the investment bank with no real change in sight. Goldman Sachs predicts another 6.2% increase for 2023 which will challenge affordability, leaving more than 40% of US households as multi-generational renters. Population demographics, household affluency, portfolio diversification and lifestyle enhancement will continue to drive demand for best of the best places to live with future appreciation an almost certainty for investors and homeowners alike. While real estate may see an occasional flattening in terms of the appreciation curve or brief periods of illiquidity, the Vail Valley is on a “to the moon trajectory.” Now is the time to buy a home if you can find one while interest rates remain favorable and the remote working trend accelerates.
The following Supply vs. Demand study confirms that all available inventory currently on the market in the Lower Valley could be sold fourteen times over (14X). This inventory crisis for homes priced less than $1,000,000 with at least three bedrooms can only be understood when compared to 2021 prior sales which is indicative of where the market is going. This imbalance will take years to correct if it ever does, given low density zoning restrictions and the steadily increasing cost of construction.
