Is a New Housing Crunch on The Horizon?
Experts say “Yes”, citing fewer homes being built in America as one reason for the new housing crunch
The job market is strong, the stock market is setting new records and wages are rising, so why is America facing a new housing crunch? According to a story in the Wall Street Journal, the next housing crunch has to do with a historic shortage of new homes. In fact, the Federal Reserve Bank of Kansas City says the number of new homes being built is at the lowest level in 60 years of record-keeping. That’s a problem for those looking to buy a new home, but can be excellent news if you’re considering selling. If that’s you, I suggest you list your home quickly.
Construction isn’t matching rising demand
Here’s the bottom line: although demand for housing is strong, the costs for land and construction have about doubled over the last decade. Combine those factors with tightened housing regulations, a lack of construction labor and a shortage of land in highly prized areas like Santa Barbara and you can see why we’re headed for a crunch.
Numerous factors contributing to the construction slump
According to the National Association of Home Builders, in 2018, builders will start fewer than 900,000 new homes. That’s less than the approximate 1.3 million homes America needs to keep up with population growth. Then there are the regulatory costs. Almost $85,000 has been added to the cost of a home according to the National Association of Home Builders. That number is up more than 30% since 2011. The workforce is hitting retirement age, which is causing a worsening labor shortage. In fact, the construction workforce declined to 10.5 million in 2016; similar to the 10.6 million in 2010 when the real estate market hit the bottom.
Another factor that’s contributing to the construction slump has to do with the fact that we experienced the lowest level on record of overall inventory of new and existing homes for sale in the fourth quarter of 2017. Economists say this slump is pushing up prices at an unsustainable pace. So, if you’re considering selling, do so now!
If you’re thinking about listing your property in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities, I suggest you act now before the new housing crunch hits. Please give me a call at 805.886.9378 or email me at Cristal@montecito-estate.com. I’ll get your home listed and sold in record time!