On a positive note, single-family housing starts rose last year to 991,000 units. This is the highest rate since 2007. However, single family housing starts fell in January and February of this year on a seasonally adjusted basis as construction costs rose. Unfortunately, the inventory of homes for sale is extremely low throughout the country. Of course, this is a major factor that is fueling the current red-hot housing market. This shortage is particularly challenging for entry-level homes, which makes it more expensive for first-time home buyers to enter the market.
How many homes does the U.S. need to catch up?
A new analysis by Freddie Mac found that supply will meet demand only if the U.S. adds 3.8 million new homes. As a matter of fact, the housing need is now 52% greater than it was in 2018. (In 2018, Freddie Mac estimated that the United States was 2.5 million units short of what it needed to meet long-term demand.) It is estimated that home builders would need to construct between 1.1 million and 1.2 million single-family homes a year to meet the long-term demand.
One potential solution to the severe shortage could be the conversion of vacant commercial buildings repurposed for affordable housing. Empty hotels from a yearlong lack of travel and tourism as well as empty office buildings due to the spike in remote working environments could help fill the gap. With affordable housing being the biggest area of need still, vacant commercial spaces could be part of the solution.
The South Florida real estate market (like the rest of the country) has been dealing with tight housing inventories for quite some time now. With this said, the record number of Americans relocating to the area has put even more pressure on the market. Thus, this has resulted in a super competitive market that oftentimes sees homes selling for above asking prices in bidding wars. To further complicate the situation, many sellers are even waiting to receive cash offers from buyers in order to avoid the potential and likely pitfall of a home appraisal. (We wrote about this topic last week.)
Needless to say, this is a great time to sell your property in South Florida. If you would like a free consultation on the value of your home, contact Live South Florida Realty, Inc. today!