Housing shortage coming!!!
Hmmmmmm. Did I make you look?? Sorry to tease you like that but I wanted to let you know what I see coming down the road and maybe not all that far away.
No, we don’t have a shortage now but there are places and prices where inventory has dropped very low. Lower than 6 months of inventory. Lower than 3 months of inventory. Remember that we see 6 months of inventory as a balanced market; neither buyer nor seller has much advantage at 6 months of inventory. Several areas in Gwinnett county are below 6 months of inventory and I think we are in for a shortage in about 12 to 18 months down the road.
Some would warn us of the ‘glut’ of foreclosures coming into the market or the ‘hidden’ inventory that banks are holding on to but they don’t take into account that there is almost NO new construction taking place and we are still a growing population coming into the area (remember NCR?). New construction will take about 12 – 24 months to ramp up once they see the need (there are a few builders starting now) but that will be too late to meet it.
To add to the demand of a growing population is the extension of the $8000 tax credit for 1st time buyers and the expansion to a repeat buyer in for $6500 if they are buying a new primary residence and have lived in their home 5 of the last 7 years. There are income limits but they are higher than they were so more buyers qualify. Affordability index is lower than it has ever been (down around 15% of income to buy a house) so many people are getting in the market further consuming the inventory. Now most of that reduction in inventory is taking place in the under $250,000 price range and we will have more higher priced inventory for a while but if we get things moving again then we will create more jobs, build more homes and see more growth as a result.
Not everyone agrees with me but I felt like I needed to tell you what I see happening and maybe be a carrier of hope. The American Economy is an anvil that has worn out many hammers and it will wear this one out too. It is already happening. We are on track for over 5,000,000 (that’s 5 Million) transactions in this economy. That is considered a healthy housing market. Yes the average sales price is down but it is beginning to rise. Yes there is still 10% unemployment but that is showing signs of recovery and while there are many that will say we are in for a hard time to come I don’t see it in the housing market.
If you want to talk about it call me. I re-discovered a fresh perspective on coffee. I remember now that it creates time. Time to build relationships and forge friendships. One of my friendships got stronger yesterday!! (Thanks Chris.) Anyone want to get a cup tomorrow?? I have some time.
Thanks for listening,
Jerry Robertson