Buyer Demand is outstripping the availability of homes as many ponder a solution to the newest driver in the housing crisis.
A Commerce Department report detailing the continued decline in the market for single-family dwellings again in April, a product of overall increase in demand and lack of availabilities driving lags in the residential construction last seen at the end of the 90s.
Various barometers of the shortage are cropping up in different areas adjacent to the housing market. Labor shortages in the lumber and construction industries are combining with sharp increases in material prices, putting record numbers of homes under construction in the US on hold. Declines in speculative builders and the sale of pre-owned homes have been factors as well, forcing buyers into a crowded market where inflated costs have added an average of $36,000 in expenses to each new development.
Last year’s boom has put the most strain on the industry, a product of low interest rates and a variety of societal factors related to the pandemic. The result in real terms meant the country was facing a 3.8 million home shortage at the end of last year, a number that will continue to grow without any alleviating measures in the area of trade and supply.
Some experts believe they are imperative in stopping the decline.
“Clearly, increasing the cost of imports via tariffs does not help the situation,” economist Robert Dietz recently told CNBC. “We need to do everything that we can to increase domestic supply, including producing more domestic lumber, as well as resolving the trade dispute. It is a matter of housing affordability.”
Cheaper and less labor-intensive answers to the problem have been theorized, adding to a growing chorus of people looking to alternative sources as ways to meet needs created by a dual lack of affordable housing.
But the situation is not likely to improve any time soon, leading some to speculate that the price of homes will continue to soar as a result for years to come.
“The resulting picture is one of a persistent supply-demand imbalance in the years ahead,” Goldman Sachs economist Ronnie Walker told Business Insider.
The accuracy of these forecasts remains to be seen, though a bump in new building permits may offer hope to those looking for a silver lining amidst a torrent of grim news that gets worse for the industry even as COVID’s impact begins to recede.
(ACHINECT NEWS)
