zlacker

“Oversupply” is in the eye of the beholder. There’s a market clearing price for everything.

The builders can hold out for a while, but the shoe has to drop eventually. Builders only make profit when building, and if your credit is extended on old projects you can’t start new ones, hence why construction has halted.

The problem is covid. Pretty much everyone in any developed economy believes the inflation+interest rate increases will be temporary. So they’re betting inflation will go back to what it was, interest rate policy will loosen again, and people’s budgets will increase again.

I think they might be in for a very rude awakening. And not only that, housing preferences for the highest income professionals have fundamentally changed due to WFH. They could all get stuck dumping the wrong stock on a weak market all at the same time in a year or so.

>>pembro+(OP)
Indeed, it's a waiting game now. The construction companies have a valid expectation that since new construction has halted, the current supply will eventually sell, and the city will even run into a state of undersupply. Only time will tell which way that goes.