Three Reasons for the Housing Shortage
Buying a home in today’s market can be a challenge. Homebuyers must make tough decisions due to the housing shortage and increasing mortgage rates. Waiting for more options may seem like an effective strategy, but is it? This blog post will explain the reasons for the housing shortage and offer solutions to homebuyers’ predicaments.
Long-Standing Underbuilding
New home construction has stagnated for the past five decades despite population growth. The number of available homes for purchase has not kept pace with housing demand, resulting in a significant shortage. In the last 14 years, the United States has been underbuilding, causing a severe inventory problem. The construction industry is trying to bridge the gap by ramping up new home builds. But building all these homes will take time, and it could be years before the long-term inventory issue gets resolved.
The Mortgage Rate Lock-In Effect
From 2010 through 2022, homeowners could purchase or refinance their homes at historic low rates. Locking in a lower mortgage rate means homeowners who sell their current houses would have to pay a higher rate for a new mortgage on their next home. Thus, many homeowners have held onto their current homes, which reduces the housing inventory of homes for sale in the market. This factors into the housing shortage, making the competition for available homes even more challenging.
Media Misinformation and Its Effects
Misleading headlines about the current housing market can influence how potential buyers and sellers feel and view the housing market’s current state. Often, a lot of sensationalist reporting gets shared on social media and other news outlets. The need for reliable information is crucial. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, states:
How This Impacts You
If you’re wondering how today’s low inventory affects you, it depends on if you’re selling or buying a home, or both.
- For buyers: A limited number of homes for sale means you’ll want to seriously consider all of your options, including various areas and housing types. A skilled professional will help you explore what’s available and find the home that best fits your needs. They can even coach you through casting a broader net if you need to expand your search.
- For sellers: Today’s low inventory offers incredible benefits because your house will stand out. A real estate agent can walk you through why selling with these conditions is especially worthwhile. And since many sellers are also buyers, that agent is also an essential resource to help you stay updated on the latest homes available for sale in your area so you can find your next dream home.
Bottom Line
The low supply of homes for sale isn’t a new challenge. There are some long-term and short-term factors leading to the current inventory deficit. If you’re looking to make a move, let’s connect. That way, you’ll have an expert to explain how this impacts you and what’s happening with housing inventory in our area.
