If you’ve been keeping track of housing industry trends, you may understand the market is currently experiencing a shortage in supply. Right now, because of the current low mortgage rates, there are more interested buyers than there are homes for sale.
As a new homebuyer, you may be wondering, when will the housing shortage end? Below, we’ve discussed this topic in detail.
Why Is There a Housing Shortage?
You may be surprised to hear that the housing shortage is nothing new. While it hasn’t been heavily discussed in the news until recently, the housing shortage in the U.S. has actually been going on for quite some time. However, the shortage was recently amplified by changes in the market and the world which occurred because of the coronavirus pandemic.
Mortgage rates plummeted at the start of the pandemic. People took advantage of the situation and the number of interested buyers grew exponentially. Furthermore, supply chain disruptions also led to a shortage in building materials, increasing the cost of lumber and other components necessary for the construction of new homes. All these factors have limited the number of options for new homebuyers.
When Will the Housing Shortage End?
It’s uncertain how long it will take for the gap to close between the number of available homes on the market for sale and the number of interested buyers. Some experts are predicting that we will see an increase in inventory this year. Others are predicting that it will take several years for builders to catch up. Here are a few factors that could affect the housing supply shortage:
- More millennial buyers: Right now, many millennials are entering the age when most people traditionally buy their first home. An increase in millennial buyers is also expected to exacerbate the housing supply shortage.
- High cost of materials: As mentioned previously, the cost of building materials is very high right now. This has placed significant strain on home construction companies.
- Lack of workers and available plots: Another reason that there’s been a delay in new home construction is the current lack of construction workers and available plots for building.
- Foreclosures will have little effect: Many people entered mortgage forbearance at the beginning of the pandemic, but now those terms are ending. Still, foreclosures are likely to be limited. The economy is making a strong recovery and many people have been able to catch up on their mortgage payments as a result. While there may be a slight uptick in foreclosures, it’s unlikely that it will have any major impact on the supply of homes.
Mortgage Solutions Financial Welcomes New Homebuyers
You don’t need to postpone your dreams of homeownership just because of the housing shortage. Now is a great time to take advantage of today’s low-interest rates. Contact Mortgage Solutions Financial today to get started with the process!