Anticipating End of the Year Housing Trends
Beware of the great housing shortage crisis of 2017. Today, there are simply not enough homes to keep up with the demand. End of the year statistics look bleak, as low inventory is a major burden on the housing market. The majority of real estate is owned by the baby boomer generation, who are in no rush to downsize. While some experts are waiting for boomers to go the way of the dodo, there is seemingly no immediate relief in sight. The current market trends are frustrating and surprising for both experts and potential buyers.
Real estate experts originally predicted the market would reach a sustainable plateau, but the housing shortage continues to be problematic for potential home buyers. The low inventory is the driving force of the market right now; new listings fly off the market at an unprecedented rate and housing prices are steadily increasing. A recent statistic from Zillow asserted the number of homes for sale on the market today is nearly equal to the amount from 1994. Now factor in the additional 63 million people living in the United States compared to the population from 1994, and you can understand how the current number of listings is undoubtedly not enough. Construction of new homes will approximately total just over 600,000, but that added supply is still not capable of meeting the incredible demand. The current market trend is not sustainable.
The low supply and high demand epidemic of the housing market shows no signs of slowing down, along with the ever-increasing home prices. Market experts attribute this supply/demand logistical nightmare to both the current political climate and the steady increase of Millennials buying homes. The recent administration’s approach is to excessively emphasize demand and downplay the limited supply. When policies boost demand and ignore supply, it impacts price growth in staggering ways. Additionally, with Millennials approaching their 30s, the desire to own a home is high on their list of priorities. Currently, the new home ownership rate has climbed up 0.6% from last year – a point when that rate was at an all-time low. A combination of unsustainable policies and a race for Millennials to acquire new home ownership will contribute to higher home prices.
Affordable housing is increasingly becoming more difficult to find. According to a recent Forbes article, the average value of an American home is $200,000; however, the average American home sells for around $263,000. These numbers are the difference between a comfortable lifestyle, and dedicating the majority of your income to pay for housing. Lower-priced homes are typically not listed due to owners falling behind on mortgage payments, resulting in negative equity and no prospect of selling. With the addition of online real estate platforms, like Zillow and Trulia, constantly streamlining information as soon as homes go on the market, affordable housing goes at lightning speed.
Interest rates have been consistently low, only adding to the mass appeal of home ownership. There seems to be no end in sight for the current housing shortage trend.