Why there’s a supply problem?

Real Estate News TV

Hey there. There’s a ton going on in real estate, and we have some problems, right? We have an inflationary time frame right now and we have got a bunch of different issues. And people are talking about is it a supply side problem or is it a demand side problem in what’s going on? And so we’re going to discuss that from a real estate perspective of what’s going on and what’s going on in the broader economy. Right. So from an economic standpoint, if I’m to look at it, there’s a supply in demand. And those two things need to be equilibrium to have a stable price. And what that means is there has to be the same amount of supply as there is for demand. And if you’ve taken an economics or as a curve for different prices in different amounts of items to come together and where they cross, right. That that’s where you happen to be at. So sometimes you’re out of balance and you’ll have too little supply or you’ll have too much demand. And if you change things from price, it’ll affect it or change the amount of supply. These things will all be out of balance, but we’ve had a big change and with all this reset that we’ve had, we’ve had a lot of supply side problems and that’s what I’ll kind of be discussing here for you and give you some examples of that, right. Of where it became a supply side problem is, you know, scarcity creates hysteria. So if we look at it, toilet paper, if you guys all remember there was a huge, huge run on toilet paper. And what happened is people ran out and bought it and there was a huge demand for toilet paper. Right. So that’s a classic example of like we demand this and all of a sudden there’s this huge run on toilet paper and I don’t know if it was rational or irrational or what went on there, but I think we all made it through and everyone had enough toilet paper, right? But that was a demand issue. What we have with supply things is our business model has changed for what’s going on for for the whole world economy. And people have, in the classic sense, gotten so good at what they do. And, you know, I actually kind of blame a company like Walmart that is so good at logistics that they became part of the problem. And what happened there is there used to be, in this classic sense, a manufacturer, a wholesaler and then a retailer and then a consumer. And this wholesaler in the middle would have goods that would be shipped from this wholesaler directly to them or from the manufacturer to them. So they would hold this stuff and store it and then send it directly to the retail establishments. And they had to have supplies on hand, right? So they would have things. But what happened is we said we want to get cheaper and better prices and we need to get rid of all inefficiencies in the system. So this wholesaler was essentially eliminated and removed or streamlined dramatically. And we used computers and technologies to go directly from, you know, the manufacturing facility, right. To some type of distribution center. And they, in theory, want it to go in one door, sort it all out and parse it out to the different locations, and then have it go out the next door like right away and not have storage of these items. And what that essentially does is when any disruption we have right, we no longer have this store of items. And if there’s any problems, if a truck gets delayed, if something is missed, then we don’t get it out in time. If any of the inputs to make this thing don’t show up to the supplier right, then that’s an issue when it has a problem and as things start to get more expensive, people now demand them because like, hey, to sell this, I have to have all of these inputs. There’s hundreds of things that go into this. And if I lack one and I have 99 of them, I can’t complete my job or I can’t complete this product to sell. I can’t get a certificate of occupancy for the home, so I need to get that done. So what happens in those cases is you now because there’s a lack of supply, you rush out to bu --- Send in a voice message: https://podcasters.spotify.com/pod/show/realestatenewstv/message