Where Did America's Housing Shortage Come From?
The United States has a housing shortage. This chronic shortage of affordable and available homes means that many Americans are unable to buy their own place or rent an apartment at prices they can afford. The result is a nation where the vast majority of people live in rental properties, with less than one-third owning their property outright.
Decades of Underbuilding
For decades, the United States has failed to invest in or build adequate housing for its people. A recent report by the National Association of Realtors® warns that this will take a long-term commitment from every American to fix.
"The state of America's housing stock… is dire, with a chronic shortage of affordable and available homes [needed to support] the nation's population," the report asserts. "A severe lack of new construction and prolonged underinvestment [have led] to an acute shortage of available housing… to the detriment of the health of the public and the economy. The scale of underbuilding and the existing demand-supply gap is enormous… and will require a major national commitment to build more housing of all types."
Housing Inventory is Lacking
Growth in America's housing inventory has slowed significantly since the turn of the century. Changes to federal tax laws from 2001 to 2012 have exacerbated this trend, with a net gap of 5.5 million homes or more than 6 million homes.
"There is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream," said Lawrence Yun, NAR's chief economist. "It's clear from the findings of this report and from the conditions we've observed in the market over the past few years that we'll need to do something dramatic to close this gap."
There's been a lot of talk about building more houses, but it's not just about how many we build - it's also about where we build them and what type of houses we build as well.
The report recommends a number of more specific policy recommendations, including expanding access to resources, removing barriers to and incentivizing new development, and making the construction of homes an integral part of national infrastructure strategy.
Is There Hope on the Horizon?
In May, the share of newly listed homes compared to active daily inventory hit a historic high—44.4%, 17.3 percentage points higher than last year and 15.1 percentage points above typical levels seen in 2017-2019. This means that for buyers, there are many great new listings every week but you’ll need to be ready to act fast.
Additionally, for those wanting to purchase a new construction home, lumber prices saw approximately a 46.2% decrease in price in late June. After slowing down for a bit during the pandemic, the new construction industry is going into overdrive to meet the demand and catch up on contracts already executed.
Is now a good time to buy?
The truth is, only you know what's best for you and your family, but as more listings continue to make their way onto the market, it's best to be prepared to act fast. If you're considering buying a home in the next 3-6 months, be sure to contact me today to learn how you can ensure you're ready to put in an offer when the right house comes on the market.