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Builders To Build
July 24th, 2012 10:16 AM

With the inventory of homes shrinking drastically, it will not be long until there is an actual "shortage" instead of an oversupply of homes available as in the past several years.  The inventory of homes for sale peaked in 2007, fueling the big drop in home prices that we have suffered with since that time.   Now we have the opposite problem.

The shadow inventory of distressed homes is no longer the threat that it once was, due to many investors making multiple purchases and government programs created to assist residential homeowners in keeping their homes.  And inventory will continue to shrink unless home builders start to build once again.  Some major builders have already begun, but many cannot because lenders are still making few construction loans.  Housing starts are still less than half the average rate from over the last 50 years!

For much of the recession, the low number of new starts was fine because many younger adults found roommates to share costs or moved in with parents.  But with the economy poised to recover, there will definitely be an increased demand for housing over the next several years.  Without construction loans or more builders building, price gains on exisiting homes may increase too much, too rapidly, and this will lead to another unhealthy market in an unstable economy. 

Hopefully, in this election year, we will see some positive changes that will help stabilize the supply and demand of real estate. But for now, sellers are positioned to be getting slightly more for the sale of their home than they could a year ago.  There is much less competition and the time is right!




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Posted by Barbara Doeringer on July 24th, 2012 10:16 AMPost a Comment

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