Meanwhile, the residential real estate market is mismatched, with investment money piling into existing properties but inadequate new construction. This suggests that many large investors and lenders are unwilling to chance the long lead times required to build new because they fear a price drop and weak sales before new construction can reach the current overheated market.
Paradoxically, for a time, this adds to upward pressure on prices, making for further distortion in the market and adding to the unreliability of price signals. Eventually though, even in real estate, markets must clear and will settle at a new, lower price level, but with many having to eat their losses.
Could be.
Example using my own home:
If Zillow is any guide, (maybe it is, maybe it isn’t,) exactly 1 year ago and proceeding for several months after, my home was appreciating at a rate of 6%.....A MONTH!
Then about mid-summer this stopped and by the Fall my home was appreciating at .6% a month!
Now it is appreciating at 2% a month. I have a modest, smaller home in the Phx metro market. The location is very good.
Again, I’m only going by Zillow and a couple other online listers BUT this last year seems to have some weird, unrealistic swings in it!