A housing shortage is likely to be one more 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, banks stopped home lending, home buyers stopped getting and home builders stopped building. Many banks have not allowed apartment construction even. Even with 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. According to CNNMoney.com, the nation is not building enough homes to keep up with potential demand. There were about 672,000 new homes started in April, less than half the long-term rate needed to meet population growth within the U.S. The housing shortage, which may already exist, has been masked by the housing market crash. Home buyers will return with job creation. Pent-up demand could catch the U.S. housing market off guard, resulting in a housing shortage and increasing home prices.
Housing inventory won’t keep up
A housing shortage seems unlikely as the U.S. housing market has been having a ton of foreclosures and excess inventory. But Forbes.com reports that if The United States can’t regain its focus on developing homes, the housing market can have a much bigger dilemma. Brian Wesbury, who is the chief economist at First Trust Advisors, told Forbes that 1.5 million houses a year need to be built to keep up with population growth. Present inventory of new and existing homes is plenty to accommodate the housing market for about 7 months.
Credit crisis handcuffs home developers
The credit crisis is boosting the housing shortage. The Los Angeles Times reports that home buyers aren’t the only ones who have to deal with tight-fisted banks. Builders are having trouble borrowing the money they need to purchase land, develop lots and construct homes. Most developers aren’t starting houses today until they either do not have anything else to sell or buyers have an approved mortgage application at hand. A builder is more likely to get credit now with a solid contract from someone who has a mortgage and doesn’t have another house to sell.
The rental market shortage is even worse
The housing shortage of 2011 is expected to hit the apartment rental market even harder. The National Association of Home Builders reports that new multifamily construction has been crippled by the credit crisis. That leaves the industry extremely unable to meet the need for market-rate and affordable apartments that is expected to accompany economic recovery beginning next year. The two- to three-year timeline that is really 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 shortage of apartments will lead to a higher rent. Mai Ling Slaughter at MSN.com says the current market is on the renter’s side for the moment, with numerous 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 may be the best time to sign an 18-to 24-month lease to lock in that low rent price.
More information 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
