12/26/2016

What About the Overall U.S. Housing Shortage?

It should not be news that housing inventory is in a crunch, both locally and nationally.  In Long Beach, for example, the average price of a house is up 16% compared to one year ago, but the number of new listings is down by 13%, and the inventory overall is down 20%.  It's a similar story elsewhere, although the figures may vary somewhat, but the profile is generally the same: less inventory.  And the reason for this is, there is an actual housing shortage, both of new units needed to be built and for existing properties that are not on the market because they were bought up by investors a few years ago and continue to be held as rentals.
"What is needed is for homebuilders to boost construction and/or for investors who bought for the purpose of renting to unload those rental properties onto the market soon. There is no indication of the second occurring because of nice rental income flows. The only way to bring additional supply, therefore, is for homebuilders to get really busy." --  Lawrence Yun, National Association of REALTORS
To make up for the shortfall, there needs to be 1.7 million new housing units constructed per year, and even at that rate, it's projected it will take about 4 years of catchup to meet the national need.
There are 300,000 to 400,000 uninhabitable homes demolished every year, and this fact along with the approximately 1.2 million households formed every year, new home construction should be about 1.5 million units per year.  But the housing crash in years subsequent to 2006 saw only about 870,000 new units constructed every year, and available unit numbers have yet to catch up.  See the full article on Forbes site.

One solution is SB 1069 in California which which makes accessory ("granny") units easier and less expensive to build throughout the state, and gives legal guidelines to what otherwise might be illegal dwellings.  Interested parties should check also with their local municipal and county laws for further guidance on such units.

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