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, banks stopped home lending, home buyers stopped getting and home builders stopped building. Numerous banks have not allowed apartment construction even. Besides a glut of housing inventory in 2010, a housing shortage in 2011 is forecast when a growing population exceeds available shelter.
Source for this article: Credit crisis will cause a housing shortage as economy recovers
Housing shorted is apparently masked by market crash
A housing shortage in 2011 could happen as the economy recovers and also the desire to create new households returns. According to CNNMoney.com, the nation is not building enough homes to keep up with potential demand. There were about 672,000 new homes began in April, less than half the long-term rate 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 creation returns, so will the property buyers. Pent-up demand could catch the U.S. housing market off guard, resulting in a housing shortage and increasing home prices.
Housing inventory won't be able to 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 The United States can’t regain its focus on building homes, the housing market can have a much bigger problem. Brian Wesbury, chief economist at First Trust Advisors, explained to Forbes that 1.5 million houses a year need to be built to keep up with population growth. Current inventory of new and present-day homes is enough to support the housing market for about 7 months.
Credit crisis handcuffs home developers
The housing shortage is boosted by the credit crisis. As outlined by the Los Angeles Times, home buyers aren’t the only ones who have to deal with tight-fisted banks. Builders are having an extremely difficult time borrowing the money they have to purchase land, develop lots and construct houses. Most builders aren’t starting 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 someone who has a mortgage and doesn’t have one more house to sell.
The rental market shortage is a whole lot worse
The housing shortage of 2011 is expected to hit the apartment rental market even harder. According to the National Association of Home Builders, new multifamily construction has been crippled by the credit crisis. That leaves the industry unable to meet the increased need for market-rate and affordable apartments that is expected to accompany economic recovery beginning next year. The two- to three-year timeline required to build apartment communities won’t be quite enough time for a large number of Generation Y professionals and newly formed households expected to need them.
Secure low rent today
A higher rent can be led to by the apartment shortage. Mai Ling Slaughter at MSN.com says the current 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 arrived at 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
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