215: How “Switching Costs” Hold the Housing Market in Limbo w/Lance Lambert

On The Market

BiggerPockets

News, Investing, Business, Education

4.8 • 820 Ratings

🗓️ 9 May 2024

⏱️ 31 minutes

🔗️ Recording | iTunes | RSS

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Summary

The housing market has seen unprecedented home price growth in the 2020s. Already, we’ve almost beat the past three decades, and we aren’t even halfway through our own. And now, with home price growth slowing, many people wonder how we’re still in a position of high housing costs and low inventory. The answer is simple: “Switching costs” are holding the housing market in limbo, and the more you know about them, the more our current situation makes sense. Put simply, “switching costs” are not only the financial but also the psychological costs of selling your current home and buying a new one. With mortgage rates close to double what most Americans have locked in, there’s a substantial financial consideration when purchasing a new home. Lance Lambert, co-founder of ResiClub and housing data authority, is on the show today to talk about home prices, housing inventory, and how “switching costs” influence both. Lance details how our massive home price acceleration put many Americans in an affordability bind, making “switching costs” higher than in recent history. So, how do we cross the threshold to enter a time when “switching costs” are low, prices are stable, and housing inventory returns? Lance walks through exactly how to tell the direction your local housing market is going in and the data investors must look at to get a better sense of how home prices and housing inventory are trending. In This Episode We Cover “Switching costs” explained and why they’re keeping the US housing market in limbo The “lock-in effect” that’s suppressing our housing inventory and keeping owners from selling Inflation’s sizable role in the massive home price appreciation we’ve been seeing The slow recovery in active listings and how far behind pre-pandemic levels we are The one data point you must follow if you want to gauge how healthy your local housing market is And So Much More! Links from the Show Find an Agent Find a Lender BiggerPockets Forums BiggerPockets Agent BiggerPockets Bootcamps Join BiggerPockets for FREE On The Market Join the Future of Real Estate Investing with Fundrise Connect with Other Investors in the “On The Market” Forums Subscribe to The “On The Market” YouTube Channel Dave's BiggerPockets Profile Dave's Instagram On the Market 108 - How the Pandemic Polarized America’s Property Market w/Lance Lambert On the Market 189 - The Fed’s Plan “Backfired,” Now They’re Scrambling w/Logan Mohtashami National home price growth this decade has already surpassed that of the entire 1990s and 2010s Read More from Lance: https://www.resiclubanalytics.com/ Jump to topic: (00:00) Intro (01:27) Housing Inventory Update (05:00) “Switching Costs” Shoot Up (10:52) Are Owners “Locked-In”? (16:04) Can Home Price Growth Last? (21:36) How to Predict Your Market (26:10) Connect with Lance! Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/on-the-market-215 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	If you're anything like me, you're probably sitting around wondering if housing inventory is ever going to increase again.
0:06.9	Because where I'm sitting, I have a hard time figuring out just where it's going to come from.
0:12.8	And I'm wondering, are homeowners locked in forever or are the switching costs of changing from one house to another going to prevent people from selling and moving
0:23.1	for the indefinite future. This is what we're getting into on today's episode.
0:32.8	Hey everyone and welcome to On the Market. I'm your host, Dave Meyer, and we have a great repeat guest today.
0:39.6	It's Lance Lambert, who is the former real estate editor at Fortune and current co-founder,
0:45.3	an editor-in-chief at Resi Club, which is a media and data-driven research company who focuses
0:50.9	on studying the housing market.
0:53.1	I've been following Lance personally for quite a
0:55.7	long time. He really understands housing market data and has a great way of explaining it.
1:01.0	And today, we're going to dive into one of his passion topics, which is housing inventory.
1:06.5	And we're doing that because housing inventory might be the most important dynamic in the entire real estate investing industry right now.
1:14.7	So we want to give you an update on what's going on with it and how you yourself can do very specific levels of research to understand what's going on in your market.
1:25.1	So let's bring on Lance.
1:35.3	Yeah. going on in your market. So let's bring on Lance. Lance, welcome back to the show.
1:36.8	Thanks for joining us.
1:38.1	Thank you for having me, Dave.
1:39.3	Love being back on.
1:40.4	Talk to us a little bit about what's going on with inventory right now in the beginning of May 24.
1:46.9	Yeah. So active listings, not new listings, active listings, what's on the market, what's
1:52.3	available for purchase. Think of that like a car lot, right? Where if you go, you drive by and you
2:00.3	start to see, you know, the lot's empty, right?
	...

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