A housing shortage is likely to be another effect of the housing bubble, even after the housing market crash, foreclosure epidemic, credit crisis, massive unemployment and other hardships fade. When the U.S housing market crashed and took the rest of the economy down with it, banks stopped home lending, home buyers stopped purchasing and home builders stopped building. Many banks have not allowed apartment construction even. Besides an emerging shadow market of foreclosures, a housing shortage in 2011 is forecast when a growing population exceeds available shelter.
Market crash shorts housing
A housing shortage that might just happen 2011 as the economy recovers, jobs are created and the desire to create new households returns. As outlined by CNNMoney.com, the nation is not building enough homes to keep up with potential demand. Just 672,000 new homes were started in April, which is less than half the long-term rate that can be needed to meet population growth within the U.S. The housing shortage, which may already exist, has been masked by the housing market crash. When job generation returns, so will the home buyers. Pent-up demand could catch the U.S. housing market off guard, leading to a huge housing shortage and numerous rising home prices.
Housing supply won’t maintain
A housing shortage seems like it is extremely unlikely as the U.S. housing market has been preoccupied with foreclosures and excess inventory. But it was reported by Forbes.com that if The US can’t regain its focus on building homes, the housing market will have a much bigger problem. Brian Wesbury, chief economist at First Trust Advisors, told Forbes that 1.5 million houses a year need to be built maintain with population expansion. Current inventory of new and existing homes is enough to accommodate the housing market for only around 7 months.
Homebuilders handcuffed by credit crisis
The credit crisis is boosting the housing shortage. The Los Angeles Times reports that home buyers aren’t the only ones who experience tight-fisted banks. Builders are having an extremely difficult time borrowing the money they need to buy land, develop lots and construct houses. Most builders have decided not to start houses today until they either have nothing else to sell or buyers have an approved mortgage application in hand. A builder is more likely to get credit now with a solid contract from someone who has a mortgage and doesn’t have one more house to sell.
Worse rental market lack
The housing shortage is likely to hit the rental market worse. The National Association of Home Builders reports that new multifamily construction has been crippled by the credit crisis. That leaves the industry unable to meet the increased need for market-rate and also for affordable apartments that is expected to accompany economic recovery beginning in the next year. The two- to three-year timeline required to build apartment communities won’t be soon enough for a large number of Generation Y professionals and newly formed households expected to need them.
Low rent should be locked in now
The apartment shortage and elevated demand will lead to greater rents. Mai Ling Slaughter at MSN.com says the current market is on the renter’s side for the moment, with many vacancies at a 30-year high and plenty of perks accessible for both current and new tenants, but it could all come to an end soon. Now is the time to sign an 18 to 24 month lease contract.
More data on this topic
CNN Money.com
money.cnn.com/2010/06/15/real_estate/new_housing_bubble/?npt=NP1
Forbes.com
realestate.msn.com/article.aspx?cp-documentid=23505825
Los Angeles times
latimes.com/business/realestate/la-fi-lew-20100613,,7268736.story
