I understand, it is hard to imagine that in today’s market that even the idea of a housing shortage seems far fetched. Currently there are too many For Sale signs and delinquent mortgages threatening to turn into Short Sales or even Foreclosures to make a housing shortage seem like a serious probability.
However, the proof could lie in the big drop in home construction over the last few years making a housing shortage a real issue. Statistics confirm that homebuilders must add 1.5 to 1.7 million housing units each year to accommodate typical population increases in the United States and the replacement of demolished homes. The production of homes far exceeded the historical average during the boom years of 2003-2006.
Builders produced a cumulative surplus of well over a million units during these boom years. This overproduction was not visible to most because investors were buying up properties. Once prices began to drop, and money was harder to come by, investors were forced to sell their properties. Currently there might be as many as 650,000 empty units above the normal levels. However, the lack of production in the last three years is still a very real issue that will need to be addressed if the trend continues.
Growing populations require housing units, without them a shortage is imminent.
Related posts:
About Angela Kraushaar
