“Why is it so hard to find a house?”
The question many homebuyers are facing this year is, “Why is it so hard to find a house?” We’re in the ultimate sellers’ market, which means real estate is ultra-competitive for buyers right now. The National Association of Realtors (NAR) notes homes are getting an average of 4.8 offers per sale, and that number keeps rising. Why? It’s because there are so few houses for sale.
While many homeowners paused their plans to sell during the height of the pandemic, this isn’t the main cause of today’s huge gap between supply and demand:
“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes . . . That decline has resulted in the decrease in the supply of entry-level single-family homes or, ’starter homes.’”Sam Khater, Vice President and Chief Economist at Freddie Mac, Economic Housing and Research Division
Housing Units by Decade
When you consider the number of homes built in the U.S. by decade, the serious lack of new construction is clear (See graph below):
Facing a Substantial Shortfall
Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage and that deficit has grown. A 2018 study by Freddie Mac estimated a housing supply shortage of approximately 2.5 million homes. An updated study estimated that the shortage had grown to 3.8 million homes by the end of 2020.
To catch up to current demand, Freddie Mac estimates we need to build almost four million homes. The good news is builders are working hard to get us there. In March, there were approximately 1.76 million building permits issued nationwide. This is a 19.4 percent ahead of the number of permits in 2020 and the number is the highest in 14 years.
While the March numbers are good news, after 13 straight years of underproductions, the chief cause of today’s inventory shortage, this construction boom needs to last for at least three years to make up for the part of the shortfall.
As trade-up buyers purchase newly constructed homes, their prior homes will show up in MLSs, and hence, more choices for consumers. Housing starts to housing completion could be 4 to 8 months, so be patient with the improvement to inventory.
About Log Pond Realty
Home is where your story begins. Home is where hopes and dreams are born, memories are made, and lives are lived. We would love the opportunity to assist you in writing your new story.
We service the Triangle region of North Carolina including Raleigh, Cary, Apex, Holly Springs, Morrisville, Fuquay-Varina, Durham, Chapel Hill, Wake Forest, and Garner.
Contact us: 919.589.3576 | email@example.com
Source: Keeping Current Matters