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Housing Shortage?
June 15th, 2010 10:19 AM

A recent article by a chief economist for the realtors association mentioned that in the near future we may actually be in a housing shortage crisis.  How can that be when there are so many For Sale signs and more foreclosures entering the market every day? 

In actuality, the big drop in home construction over the last few years suggests that it could very well become a real issue.  Home builders must add 1.6 million to 1.7 million housing units each year to accomodate typical U.S. population increases and replace demolished homes.  Housing starts in 2007 were only 1.34 million, then dropped drastically in 2008 to 0.90 and in 2009 to 0.55.  The forecast for this year and 2011 is no more than 0.95 million starts. 

If this great underproduction trend continues for several more years, and the foreclosures are gobbled up by investors, there will be  fewer resale homes to purchase and even less new homes to consider.  Also, with so many homeowners opting to rent their homes long term until market conditions improve, it may be difficult to find owners even willing to put their homes on the market for sale. 

The good news is that, given enough time, this shortage will begin to drive house prices upward again and the lengthy "buyers market" years will end while a new "sellers market" emerges.  In every real estate market, someone always wins!

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Posted by Barbara Doeringer on June 15th, 2010 10:19 AMPost a Comment

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