Housing Market Sink Analogy for Inventory & Demand

追加: 2026-05-21

[00:00:00]Overall inventory's about half what it should be, but at the same time demand is much lower because of the high interest rates. So, those two go in lockstep. And I think the best metaphor that I really want to share with everybody is to visualize your kitchen sink. Okay? Now, your kitchen sink has three major components.

[00:00:21]It has, of course, the basin of the sink. It has a drain and it has a faucet. And for the last 3-plus years, this is the way it's been, okay? The drain, representing the absorption rate or the demand for housing, the buyers.

[00:00:38]The buyers are the drain. They're draining the supply out of the market, okay? The drain has been plugged up. And so, it's been plugged up by about 30%, you know, roughly, okay? So, only 70% of the drain is working, okay? So, that's that's the demand side. And we've seen demand destruction basically because of the housing affordability being so, so low.

[00:01:00]And then you have the basin. That's the existing inventory.

[00:01:05]That's what's for sale. And it's only half full. Or if you're a doomer, if you're Nick Gerli or Peter Schiff, it's half empty. [laughter] Look at it however you want, right? And then the faucet.