On page 9 of the June 2010 Realtor magazine, Lawrence Yun poses a question of an impending housing shortage. With a historical norm of 1.6 million new homes needed to keep up with population growth, the housing market was saturated with too many new homes from 2003-2006 with an estimated surplus of 1.28 million homes above what was really needed. For 2007-2009, builders built on average 930,000 homes per year. This slowdown in new construction has reduced the surplus from a high of 1.28 million to a deficit of 730,000 homes. Yun predicts by 2011 that there will be a 2.3 million home shortage based on historical growth rates.
Where are all the people? Many people affected by the housing crisis moved into a relative's home. Many other people who would have purchased a home, likely delayed moving out of their parent's home. Other reports indicate that many students, fearful of not finding a job in the current employment market, have decided to pursue advanced degrees in the hope that once they graduate that unemployment will be down and they'll have an easier time finding work. Whatever the reason, its clear that we now have fewer people in homes as evidenced by the large number of vacant homes on the market.
Last week, I took a listing in Shorewood, IL (under contract in 7 days ) and the owners were selling because the husband took a new job with a commute of over 90 minutes. They are considering building a new home.
On the same day I finalized their contract, I was working with a first-time buyer to build a new duplex home in Joliet. She wasn't happy with the existing homes for sale in her price range and the builder offered plenty of incentives. She was happy to choose her colors and to have found a home without some of the flaws that are common in foreclosed and short sale homes. Many of these homes are left vacant and need a lot of TLC to make them livable.
It seems that builders who were able to weather the new construction storm of 2007-2010 will be poised in 2011 and beyond to start building again, if in fact, a housing shortage comes to fruition. It will take time but new homes will be needed in the next few years to accomadate new households and a larger population.
Sign up for my newsletter and get entered to win McColly Real Estate's $50,000 Home Sweet Home Sweepstakes!