What Is the Status of the Nation’s Housing Inventory?

Since the peak of the post-pandemic real estate boom, the housing market has moderated, but the seller’s market we witnessed has generated a lot of discussion regarding the makeup of the country’s housing supply. Will seller listings continue to be snapped up before they go on the market, or do we have enough homes to match buyer demand?

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There are several factors that affect the housing inventory, but most analysts concur that there aren’t enough homes on the market right now given the number of individuals who want to buy them. We’ll assess the situation and look for any potential trends.


Why Is the Housing Supply in the US So Low?

With the recent rises in loan rates, the housing market may be slightly weakening, but steady sales of homes continue. The S&P Core Logic Case-Shiller Index shows that prices increased by an average of 19.7% in May.

According to some analysts, the housing market is self-correcting and pricing and demand will soon balance. Others claim that until we develop more homes, we won’t experience price stability over the long run. As you enter the latter half of 2022 or a new year, be aware of the following.


  • The Great Recession’s repercussions

In 2008, when the housing bubble broke, many people lost their houses. Ten million people risked foreclosure, and the value of homes fell by at least 33%. Many people still feel the consequences of such a strike, and it takes a long time to recover. Following the recession, fewer homes were constructed as builders struggled with a drop in demand.


  • Issues with the Construction Workforce

Unfortunately, the construction industry is also experiencing a labour shortage. As a result of a high demand for labour and a dearth of workers with the necessary skills in the building trades, the industry has long grappled with a labour crisis. These positions, though frequently well-paying, might be physically taxing and aren’t regarded as “stable” or as respectable as white-collar work.

Thanks to the worker-friendly environment of the economy, labour shortages are more pronounced today. Many people launched their own businesses or discovered higher-paying promotions in their fields as a result of The Great Resignation. Construction companies may find it difficult to keep up as workers are able to demand higher wages.


Demand for New Buildings

There are more homeowners than renters as a result of recent low borrowing rates. They decided to build a larger home so they could obtain more house for their money than they otherwise would have.

Since borrowing rates are rising, buyers are really struggling to find affordable housing. Freddie Mac estimates that there is now a housing shortage of 3.8 million units. To meet demand, not enough homes are being constructed. Because it can be difficult to find a new place to live, people don’t have much freedom to migrate.

By taking clients to see some of the model houses now for sale, realtors are collaborating with home builders more than ever before. The thought of creating their own home exactly how they want it may appeal to those who have the patience to wait for construction.


Why It’s Difficult to Meet the Needs for Housing Inventory Right Now

It is true that the growth of our housing stock has not kept up with the demands of the population. Building more would seem to be the obvious solution, right? Construction firms nevertheless need to turn a profit. Due to rising mortgage rates, some builders are reducing their efforts to build new homes or renovate existing ones.

Why? They anticipate a decline in demand as consumers leave the market due to increasing prices. There is a narrow line between providing enough accommodation and taking a financial risk on a project that might not be profitable at first.

Obviously, not all home needs to be brand-new. As people work to refurbish historic structures to repurpose as modern dwelling or restore to their previous glory, there is some light at the end of the tunnel. Developers can renovate an existing structure rather than allowing it to fall into disrepair. The time and expense of restoration are typically shorter than those of new construction.

However, improvements probably won’t be sufficient, particularly in densely populated areas with strong demand. Building needs over the long run don’t necessarily coincide with current economic conditions. To keep up with expansion, the nation needs additional homes, yet building is stagnant and labour is in short supply.


Where there is no supply, how do you find it?

Legislators and real estate industry professionals are looking for possible solutions to the housing problem. Some suggestions for national, state, and municipal policy include:

  • Expanding the availability of multifamily housing in our largest cities. Density can help keep price competition low. Young people who migrate to places like New York and San Francisco in search of employment prospects need a place to reside.
  • Allowing other structures. For the proper family, tiny homes and mother-in-law apartments can be excellent real estate options. Young adults who wish to purchase a home on a short budget may find that little square footage is a great option. However, some zoning regulations prohibit smaller constructions in some locations.
  • Encouraging the renovation of vacant offices and factories.


Of course, ideal circumstances cannot wait for real estate experts and their clients. Buyers & their agents should be ready to put in a lot of effort right now if they want to get a competitive advantage in a seller’s market. Utilizing your contacts to identify homes that haven’t hit the market yet, becoming ready to move quickly once you find the perfect house, and making competitive offers can all be helpful.





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