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Originally Posted by XutvJet
The housing, lumber, automotive parts, electronics, etc. shortages were caused by COVID. The world locked down and companies reacted (over-reacted in many cases) by shutting things down, laying off people, rental car companies selling fleets, etc. The world came out of the lock-downs quicker than expected and it has caused major supply issues. It will take time to ramp up production, hire/train people, etc.
With respect to housing, the demand initially plummeted early to mid and many homeowners were reluctant to sell for a number of cautious reasons. The inventory went down dramatically and then in late 2020, the demand for homes took off, but sellers simply weren't there. Then factor in all the people renovating their homes, building depts. having limited staff to approve new builds, few contractors available to build homes (because they were busy renovating), etc. etc. and you get the supply issue weren't facing.
My wife and I have been looking for a new home since October 2019 and been actively going through the process since that time. We have seen just how nuts things have become and have decided to wait it out now because we're not interested in paying 20+% over appraised/assessed value. People are being absolutely stupid paying so much for homes (and cars). Think about all that extra property tax you'll be stuck with. Higher insurance costs. Dumb.
We're probably 4 to 6 months from some equilibrium and those the paid so high now and are really going to regret it.
Barring some unexpected X-factor COVID variant that evades immunity and is way more deadly, things will improve slowly. With that said, things could get hairy overseas, especially in China and Asia. Those are huge areas with big populations, much of which didn't get COVID because of extreme lock-downs. COVID is sitting on the other side of the door, waiting patiently. Those countries simply don't have the means to vaccinate and the vaccines they have are largely ineffective. Like with what's going on in Australia and New Zealand, China and other Asia countries will be in perpetual states of lock-down until either they get a good vaccine or they come to terms that you can't control COVID with lock-downs. The constant lock-downs in places like China will have an impact on the production of goods for the next 2 to 3 years. When it comes to COVID, you're damned if you do and you're damned if you don't.
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We all have to realize the markets are very different in different places. In my area we did not see a drop off in house sales when covid hit, actually it went up to the point where supply dried up. Last year only the houses which were move in ready were really selling, if a home was not updated when listed they sat on the market for months. We knew we want to sell in 2 yrs since we were building and did not want to have to deal with a slow moving house so we made the decision to remodel our Master Bath and Kitchen the only two rooms in the house which we did not touch. Today we could have sold without putting a penny in, people are buying almost anything available.
I know where we are smaller builders begin switching to reno over building new, reason being was less hassle and higher profits on renos. It was definitely a perfect storm since no one expected being in a lock down people would begin fixing up their homes. Unless you were in Michigan where they bared people from buying paint and other things the state declared as non essential home repairs.