Housing shortage may be caused by credit dilemma as economy recovers
A housing shortage will likely 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 and took the remainder of the economy down along with it, banks stopped home lending, home buyers stopped purchasing and home builders stopped building. Even apartment construction has dried up. Despite having a glut of housing inventory this year and an emerging shadow market of foreclosures, a housing absence in 2011 is forecast when a growing populace exceeds available shelter.
Resource for this article:Credit crisis will cause a housing shortage as economy recovers
Housing shortage masked by market crash
A housing shortage in 2011 could happen as the economy recovers and also the desire to create new households returns. CNNMoney.com reports the nation just isn't building enough homes to keep up with potential demand. Just 672,000 new homes were began in April, which is less than half the long-term rate that can be needed to meet population growth within the U.S. The housing shortage, which may already exist, has been masked by the housing market crash. When job generation returns, so will the home buyers. Pent-up demand from customers could catch the U.S. housing market off guard, resulting in a housing shortage and rising home prices.
Housing inventory probably won’t keep up
A housing shortage seems like it is extremely unlikely as the U.S. housing market has been preoccupied with foreclosures and excess inventory. But it was reported by Forbes.com that if America can't regain its focus on building homes, the housing market could have a much bigger problem. Brian Wesbury, who is the chief economist at First Trust Advisors, told Forbes that 1.5 million houses a year have to be built to keep up with population growth. Current inventory of new and existing homes is enough to accommodate the housing market for only around 7 months.
It appears the credit crisis has handcuffed the homebuilders
The housing shortage is boosted by the credit crisis. The Los Angeles Times reports that home buyers aren't the only ones who have to deal with tight-fisted banks. Builders are having an very difficult time borrowing the money they have to purchase land, develop lots and construct houses. Most builders aren't beginning houses until they can either have nothing else to sell or until buyers have an approved mortgage application in hand. A builder is more likely to get credit now with a solid contract from somebody who has a mortgage and doesn't have an additional 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.
Secure low rent now
The apartment shortage and elevated demand will lead to greater rents. Mai Ling Slaughter at MSN.com says the market is on the renter's side, with vacancies at a 30-year high and plenty of perks accessible for both present and completely new tenants, but it could all come to an end soon. Now is the time that you should use to sign an 18 to 24 month contract.
Citations
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
LA times
latimes.com/business/realestate/la-fi-lew-20100613,,7268736.story