Will New Homes On The US Housing Market Be Enough To Meet The Housing Demand

Dated: 08/07/2018

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It is 2018 - and the country is facing a housing shortage due to fast selling listings on the market, especially for first time buyers. This year, the buying season began from January and by spring the new homes market was on fire. Currently, the country is witnessing its lowest level of residential property inventory in at least two decades. Though this is good time to be a seller on the low to mid-range market, it is an extremely hard time to be a millennial looking to purchase a home for the first time.

During the mid-1970s recession and the housing crash of the the early 2000s, builders put up significantly more homes for sale per U.S. household. This was a much bigger volume than the number of new homes being constructed today - although we are in the ninth year of an economic expansion! In recent times, a combination of tightened housing regulations, a lack of construction labor and growing land shortage in highly prized areas has exacerbated the crisis, according to industry experts.

The National Association of Home Builders estimates that builders will be constructing fewer than 900,000 new homes in 2018. This figure is much lower than the roughly 1.3 million homes needed to keep up with population growth. According to the National Association of Realtors, the overall inventory of new and existing homes for sale hit its lowest level on record in the fourth quarter of 2017- estimated roughly at 1.48 million.

The lack of homes for on the market has made things harder for first-time buyers and has fueled a bidding war around the country. Builders in remote areas are experiencing stiff resistance from younger buyers due to the higher prices for land situated closer to the cities.  Edward Glaeser, a Professor of Economics at Harvard University says that “There’s a tremendous mismatch between the places where people want to live and the places where it’s easiest to build,”

Today, there may be a shortage of new housing but the upside of all this is that builders are promoting better standards for everything from safety to energy efficiency to longevity of newly constructed homes.

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