Housing is BOOMING! Will it BUST?

The US Housing Market is absolutely BOOMING right now! But are we in a Bubble? Is the boom about to BUST? Are we headed for disaster? Discover why the boom is so intense, what that means to you personally, and what is most likely to happen in the near future.



It’s a Booming Sellers Market!

We set a record in our mentorship group this past week. A listing in Georgia had 180 showings! Can you imagine? Cars lined down the road all weekend, just trying to get a glimpse of this listed property. And it wasn't even listed low. In fact, we thought the property was listed high considering it needed a lot of upgrades.

Low Inventory, Strong Demand

Why is the market booming right now? It's economics 101. You have record low inventory and we have strong demand. People want to buy houses right now. When you bring those two together, what do you get? Rising prices. This is called a seller's market, but this is like a seller's market on steroids because of the record low supply.

This is the best time in American history to be in business as a creative real estate investor. Now, you do need to know what you're doing because with the record low supply it's tough to find deals. And you need to structure them right. You can still make a lot of mistakes and fail miserably in this booming market. But if you do it right, this is as good as it ever gets for a creative real estate investor.


Short Term Tips for this Booming Market

Home Buyers:

For those considering buying a home right now you have limited options on the market. If you can be patient and wait maybe six months to a year, you will probably see more options available. And if something does come up between now and then, you will be competing for it. Again, I'm telling friends and family, if they don't find the perfect home to be patient because it will take time before you get increased supply in the marketplace.


Because supply is at record lows, we're getting a crazy amount of showings and getting multiple offers. It is the greatest seller's market I've ever seen. If you're a rental property owner looking to get out and retire, now is the time to sell, like right now! There is such little inventory, you can even sell houses that need a lot of work, and it is so easy to sell. So, if you are considering selling, sell now.


As an investor, is this a terrible time to buy? Well, I have a video on this very topic called How to Buy Rental Property at the Top of the Market. I'm not saying we're at the top of the market, but that video argues that since rental property is a long-term investment, and because you're buying for the cashflow, what really matters is each particular deal, not what the market's doing. Buying rental property is independent of the current market conditions in some respects, because you're ultimately buying for cash flow. Now, what the market's doing might make it almost impossible to cashflow, so you won't buy, and if the market is crazy hot then it's difficult to get property that cash flows well.


Is this BOOM About to Bust?

Are we in a bubble? Is this about to bust? Let's explore the two factors fueling this booming housing market.


#1. Strong Demand

Why is demand strong right now? We have record low interest rates and when interest rates are lower, it costs people less interest to buy a home. Now we've had low interest rates for a long time, but recently they have plunged to record lows  which is definitely stimulating demand.

But there are some factors that keep the demand a little bit in check, so it's not completely out of control. The first would be the trend of people staying in their homes longer. Did you know that in 2005 people were likely to stay in their home on average five years? Now fast forward to today and that statistic is an average of ten years. People are staying put longer. This is a trend that started  well before the pandemic, but obviously it was amplified by it. Another aspect that is keeping demand in check is low inventory. People aren’t selling because there’s just not a lot of options to buy.

Healthy Demand

So, we have strong demand, but it's not out of control. When you look at a bubble, what you often see is a euphoria, out of control demand and we’re not seeing that right now. The people buying homes right now aren’t speculators buying houses just hoping they'll magically go up in two or three years. These are homeowners who want to move in. Sure, we have some investors in the mix that are trying to buy fixer-uppers to renovate and resell. But we're not seeing the kind of speculation that we saw during the bubble of 2007-2008, when people were buying multiple properties just hoping they will go up in value.

This is healthy demand because it's driven primarily by people that want to become homeowners. Remember, single family homes have a utility value. They are shelter and that's what's driving the majority of the purchases right now. People are always getting married, graduating college and growing up and they want to become a homeowner. This isn’t a bubble, it’s healthy demand.

Factors that Could Reduce Demand

What could change to drastically reduce demand in the next six months to a year? The only thing I can see that could change that would affect demand is interest rates. If interest rates increased dramatically, that would most definitely slow demand.

Over the past decade interest rates have remained exceptionally low. That's a bit surprising because once we came out of that recession, you would expect interest rates to increase, but they didn't. Some of the interest rate pressure is political and politicians wanting to look good, so I think interest rates are going to stay low for a long time because our society is used to it. I'm no expert, but this appears to be the new normal. So, while it could go up a little bit, I don't think it will increase enough to drastically wipe out demand. I think demand is going to stay relatively strong and consistent.


#2. Low Inventory


There’s another side of this equation, which is record low supply. What is causing that?

  • The trend of people staying in their homes longer
  • We’re in the midst of a foreclosure moratorium: this has been extended to June 30th, so we have a very low number of foreclosures that are hitting the market. Now, foreclosures have always been a small subset of the overall inventory in a marketplace, so it's not a huge contributor either way, but it's certainly not helping the record low supply when so few foreclosures are hitting the market.
  • Lack of new builds: The main reason why we have record low supply right now is a lack of new builds.

 The 4 L's: Why We Have a Lack of New Builds


Over time, governments enact more and more laws, rules, codes, and regulations which has made home building extremely difficult. It's a lot harder to build a home now than it was in 2005 when that bubble was being created. It is so complicated it's any wonder anything gets built in America anymore. I recommend home buyers always buy existing. Don't buy land and build a new home. It is so complicated; it takes so long and is more expensive than you thought. Buy existing and remodel.


Home builders typically focus on bigger parcels of land and there is a lack of buildable land. They're having trouble, not only with finding land at a decent price, but also land with infrastructure for utilities because government moves so slow in this area. Delays of funding and the lengthy construction process just add to the dilemma.


You look around at anyone in age 30 or below, and our society has just systematically removed people from the building industry. They're attracted to tech, to all kinds of sexier industries besides the building industry. So, we do have a lack of quality, intelligent, and highly skilled labor, which has resulted in labor costs going way up. People complain about those from other countries coming in here to do our building. Well, someone has to build our buildings, and a lot of Americans don't want to do it anymore.


The National Association of Home Builders just released a statistic this week that lumber prices have gone up 170% in 10 months. This is killing builders right now. Some custom builders have had to tell their clients they can’t build because the contract was signed when lumber prices were literally less than half of what they are now. So, builders are still building some homes, but due to the difficulties and costs, they're price point is so high that the majority of buyers are priced out of these new builds.

These are the factors that are keeping inventory so low, which brings us to this next question. What could change this? If suddenly we had more supply and a drop in demand, would this stop the rising prices? Would we see prices drop?


Factors that Could Increase Supply

If demand would not trigger a bust, could supply? Could a ton of new inventory suddenly hit the market and completely bust what's going on right now? Well, let's examine how these 3 factors could change and then you can decide whether you think it's going to happen.

Trend of People Living in their Homes Longer:

This trend has been amplified by the pandemic. If there was this definitive day, an ending to the pandemic, would that suddenly trigger people to sell their homes, buy an RV and travel the country? I don't see that happening on a massive scale. Unfortunately, this pandemic is more complicated than we imagined, so it looks like it will be gradual improvement. Furthermore, I don't see people just going throwing caution to the wind and selling their houses to buy RVs. Which means I don't think that's going to add to the supply.

Lack of New Builds:

Could an increase of supply come from a bunch of new builds? I don't know that this will happen either, even if lumber prices do go back down. Builders have such a headwind and it's such a slow process to build, that is makes this a highly unlikely factor.


What happens when they lift the foreclosure moratorium? When the moratorium is lifted, is that going to create a surge in new supply that's going to bust this market? Well, what we're being told is that 12% of homeowners are in some form of delinquency on their home mortgage. By comparison, the normal average is about 4.5%, so it's almost triple. But that doesn’t mean that all these houses will suddenly hit the market. There are 4 main factors of why this is true:

  • Equity: Everybody out there that is past due on their mortgage has equity, which was not the case in 2009-2010. This is a different situation.
  • Loan Modification: We also need to remember that lenders make a lot more money when they keep a loan in play versus having it paid off. So, one thing that I think we're going to see in an unprecedented way is a lot of lenders willing to do a permanent loan modification, where they take the past due amount and stick it on the back of the loan.
  • People Want to Keep their Homes: Now we also need to consider who's behind on payments. When I first got started, I had to knock on plenty of pre-foreclosure doors. One thing I learned was that just because they're past due doesn't mean they want to sell. I see that not only would the lenders be open to doing a permanent loan modification, but the homeowners are going to jump on it.
  • Refinancing: People I know have refinanced, even with the bad credit, into lower interest rate loans and paid off their past due amount.

From my experience in real estate, I don’t think that just because 12% of people are past due on their home mortgages, that it means 12% of them are going to sell. Some of the people that are past due are landlords. They're collecting rent right now but they're not paying their mortgage, leading to a large past due balance. Yes, it's hurting their credit, but they're doing it anyway. So, I believe they would be somewhat open to selling.

I can see we're going to get some new supply on the market when the moratorium is lifted, but when? Recall that foreclosures take a long time. Just like the pandemic isn’t going to end overnight, even if the moratorium is lifted it's going to be a slow process. It's also important to remember that there is pent-up demand because many people haven't bought yet because of low inventory. So as soon as some new supply hits the market, it might get gobbled back up.

The Future is Hard to Predict

The future isn't certain and can be hard to predict. An example of how difficult it can be is from 2011. What was making massive headlines then was the glut of shadow inventory the banks were holding from foreclosures that they hadn't listed. We were hearing that there would be a double dip in the reduction of property values and it was all gloom and doom.

Instead, what happened was that for the first time in history, Wall Street Hedge Funds bought up tens of thousands of houses. All of a sudden, that shadow inventory was gone and we never had a double dip. Now would seem like a perfect time for them to sell and thus creating more inventory, however it seems they’re holding on. They don't want to sell them, much like a bank doesn't want to have their loan paid off. They want to keep the interest coming in. In fact, these hedge funds are looking for houses right now and they have builders building new subdivisions just for them.

Conclusion: Will the Booming Market Bust?

In our booming market, demand is strong and healthy. Even if we do have a surge in supply, we have the pent-up demand to counter balance it. Ultimately, what I see happening is we will get some new supply which will mellow this booming sellers market. Which means, if you're looking to buy a home you may want to wait about a year until we get some inventory. I'm not worried and running for the hills. And I also don't think it's going to be nearly as intense as people predict.


  1. Michael Cichetti says

    I am just a regular homeowner in Atlanta with no real estate opinions, but I just want to say thanks for the great education Phil. I’m gonna share with friends and family that have homes they might look to move since the market is doing so well.

  2. Connie Abbott says

    Phil, I think we might see even a sharp rise in interest rates. We have a new president who has a whole different way than the one before. Besides that, really harsh inflation is predicted because of national debt and those types of factors. We’re hitting a tipping point in the economy in that regard, quite soon.

    I’m looking forward to selling our house north of Seattle and there’s this other factor: The cities where there was the massive rioting are a huge issue, and people are moving away from them in huge numbers–also, for states where the governors have been exercising their power with oppressive covid measures, people are leaving in droves. From Washington state, everyone’s heading off to Idaho or Montana. .

    My problem in selling is not being able to find a place I want to move into! We’ll see what happens. God is faithful!

    Thanks for your presentation!

  3. Karen sands says

    Hi Phil
    Where can I find the lenders that want to lend money for investment real estate that you refer to? I own a successful property I have rented for
    12 years- in Lake County Mt. Dora -and want to expand in Florida.

  4. I live in a gated community have 1740 homes. Over the years and average number of for sale units was around 80. Right now there are 10 homes for sale average square foot price is going up 25% in the last two years.

  5. Nena Bayaua says

    I’m in San Diego, CA. Market here is so fast I can’t find a house to invest in. Low inventory and lots of investors.

  6. Hi Phil, you have helped me so much during the past few years, thanks! I’m in Bullhead City, AZ. So far there is a low supply here. But people are building like crazy. Another thing, this area is manufactured home friendly. I bought my first home owner-carry. Now trying to purchase a MH. I know they are higher in interest, because you told me, but I have the land and want to make it my forever home. I took out the equity in my present home, now only $488 per month,, to make these purchases. Land here is cheap,. So I came out well. That’s all for now. You are great!

    • Phil Pustejovsky says

      I’m doing several mobile home deals in my area right now. It’s a gold mine of opportunity thanks to the lack of inventory.

  7. Carmelita J says

    Great video. I was especially interested in your take on the record low interest rate. I will be checking your apprentice information. Thanks!

  8. Brandon Basso says

    I enjoy your videos, I have learned a lot from them.
    I just sold a seasonal cabin on water in southern NH for $330k cash, no contingencies. It was amazing to see the amount of people who showed up for the open house. List price was $299k.

  9. Juan Alvarado says

    Awesome video as always Phil! I love it! But what about the people who may be thinking about relocating or may have lost their jobs? I live in Los Angeles.

    • Phil Pustejovsky says

      There is a significant migration of people moving from California going on right now and they are heating up markets like Las Vegas far beyond even what would normally be the circumstances. Choose your destination city wisely because its hard to find inventory in many of the common cities Californians are moving to.

  10. Joe Olivares says

    How it going? My name is Joe and I was wondering about something I seen about paying the taxes on a house that is not being paid by the owner and it they don’t pay within a certain time it becomes yours. Is there more to that or is it yhst simple?

  11. Mark Labitad says

    Thanks Phil. So how does someone become a realstate apprentice? I would like some more information on that one. Thanks

  12. Zachary Hutchins says

    Love your real estate education material – been watching your YouTube videos for years.

    Question – My wife and I live in the eastern suburbs of Tampa. We rolled house hacks (live in, fix, and flips) over the past six years and have a nest egg saved. We were between deals during 2019 and got stuck in a rental when COVID hit. The Tampa market is absolutely insane with low inventory and every listing having multiple offers. Any thoughts on finding a deal in this area?

    • Phil Pustejovsky says

      You have to be way ahead of the competition; if you’re looking for just one deal, go extremely granular by sending hand written letters to specific properties and perhaps even knocking on those doors too.

  13. Doug Coffey says

    Mr. P,
    It is always great to take in your information. As a Florida native and a son of a mother who was a RE Broker for nearly 40 years there is nothing like local knowledge and history permitting experienced foresight in some of the markets. Central West coast area Pinellas to Hernando Counties is my turf with West Pasco being my specific designated market. I am a small time entrepreneur with 10 rentals, holding a mortgage, occasional flip and do some hard money lending which supplements my retired, or as I say it, “my tired income”, at nearly 74 keeps me at least brain active. I am a very open minded type who doesn’t work in a box and at time very unorthodox, as the professionals would say, creative financing. My word is more valuable than money meaning all is ethical and legal.

    A person never stops learning and your Vids are a great contribution to me and my operation. Here is what I find every time I watch your presentations, confirmation. You know when people think way out of the box sometimes they start doubting themselves a little bit, or even think how come others are not seeing this or that… You have confirm many things for me. Like you indicated, paraphrasing, you are not a fortuneteller but you are a smart guesser (lol). That is where I try to be balancing my niche’.

    Okay feedback to you: Yes this market is the same, no inventory, top asking prices, and buyers of all kinds all over the place.
    Also you are right on, government so engaged in every aspect of building, including rehabs. Example, had a property in my LLC’s name, I am inside painting, code enforce comes in telling me I cannot paint my own property because it is the LLC’s property. Didn’t have to pull permit but had to hire a licensed painter. As we know just one of many fingers in the govt. I am always on the search for a deal, having a relationship with a number of realtors sometimes offers me an early notice of a property coming up, or maybe even one of those majestic “Pocket Listings” . Additionally friends, associates and acquaintances occasionally refer me to someone considering selling allowing a private sale.

    Again, I find you and your Vids extraordinary, accurate, clear and with invaluable information brought to the table by someone who does it not just educated in it….Big Difference!!!!
    Thank you and may God Bless you……DougC

  14. clark johnson says

    how do i get a refi with poor credit. These brokers shop your refi with many brokers and that drives you credit score lower. and then discount property. how do i stop that.and get a honest refi. thank s clark

    • Phil Pustejovsky says

      That’s not true, if you have your credit pulled by several mortgage brokers within the same 2 week period; it only counts as 1 pull.

  15. I don’t have money to flip a house so I bought a condo 2/2 in Houston TX 60K plus 16K to remodel and put a price tag of 94.900K was remodeled nicely, however, it has been on the market for almost 3 weeks but a lot of visits . 2 made an offer but way below what we are asking .. Is this too soon to drop the price? I just love ALL your videos. Thank you

    • Phil Pustejovsky says

      Two offers? Did you announce a multiple offer situation? If so, whatever the final was, is probably current market price. It sounds like you found a way to list your property too high, even in a Sellers Market.

  16. David Sampsonis says

    Hi I’m David. From Boston. I want to learn how to flip houses.

  17. they are going up – inflation

  18. Cathey and Bradley says

    As always you are a great teacher, read your book a couple times. We have noticed in the last year, houses sell so fast!
    Always had an interest in real estate. We are in Bangor MI. Working to finish our house within 2 years and sell. It is a large Victorian and needs a ton of work. Money is tight, so slow going.
    Everything your saying makes sense.
    Thank you for sharing your knowledge
    the Schusters

  19. Charles Borrelli says

    Phil I’m 56 years old and the population of the world has doubled. In the 2008 crash we quit building for 10 years but kept making babies. For now I’m going to keep flipping down here in Brevard County. it’s been amazing. I think you are dead on with interest rates

  20. Robert Seward says

    I want to build multiple duplexes in hot fort Myers. I only need a strong partner?

    Rob Seward
    34 years Builder/Flipper
    Va., NC, Fl.

    • Phil Pustejovsky says

      You don’t want/need a partner; you need money. Avoid accumulating partners and go get the money from all the lenders out there that are begging to lend money on good deals.

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