Matt Egan at CNN Business talked with the CEO of KB Home, Jeffery Mezger, about the current housing market. (CNN)
- INVENTORY: What’s happening now is the polar opposite of what happened in 2008 Mezger argues. Instead of a housing glut, we are seeing a historic housing shortage. Mezger says, “We’ve been under-building for the last 15 years,”
- NEW BUYERS: Mezger argues that the current demand is being driven by a new flock of buyers. “Post financial crisis, millennials either saw their parents lose their home, couldn’t get a job, or had a lot of student debt. Millennials deferred their first home purchase much longer than previous generations.” He says that Millennials make up the largest cohort of buyers for KB Home, a trend the company said began before the pandemic.
- PROFITS: KB Home’s first-quarter profit swelled by 62%. It handled more home transactions than in any first quarter since 2008. And even with the lumber price surge, KB is making more money. “We’ve been able to raise price enough to cover the cost and raise our margin. Demand is that strong,” Mezger said.
It’s important to note that mortgage rates are rising and we have to be closing in on a price ceiling. At one point does it just become to expensive to buy especially with rents stagnating if not falling?