Insight from the Law office of Joseph Marino, PC

The United States's housing market is now suffering a severe housing scarcity that has never been experienced before. For years, a lack of home supply has been a thorn in the side of an otherwise strong housing market. The supply of both new and existing houses for sale is at an all-time low. 

The housing supply has not been able to keep up with growing household demand for various reasons. 

What Do The Numbers Say?

Lack of available construction labor (cited by 81 percent of construction firms surveyed by the Associated General Contractors of America in 2020), land use regulations, zoning restrictions preventing supply from picking up in areas with the highest demand, NIMBYism (Not in My Backyard), lack of land developers, and an absence of affordable housing are just a few of the most commonly cited reasons for housing shortages. 

The current housing scarcity is severe and growing, owing in part to the COVID-19 pandemic's impacts. According to Freddie Mac, the shortfall had grown by 52%, from 2.5 million in 2018 to 3.8 million in 2020. We can expect the scarcity to persist in the foreseeable future, given the cheap mortgage interest rate environment, increasing demand, and the need for extra room. The drop in supply at the entry-level is considerably more significant than the total deficit. The proportion of entry-level dwellings in total development has decreased from 40% in the early 1980s to about 7% in 2019.

Because many individuals are spending more time at home, the United States is now seeing a surge in housing demand that is much beyond what record-low mortgage rates would normally generate. This strong demand has exacerbated the housing supply shortfall, causing property prices to climb by more than 12% from a year earlier. A decline in home demand soon may not occur, particularly given the demographic tailwind. Given the huge number of young adults entering the housing market, demand for entry-level single-family houses is expected to continue strong for the remainder of the decade.

Due to a combination of low supply (especially entry-level) and high demand (especially entry-level), entry-level prices are rapidly rising well above overall prices, causing buyers to face affordability issues and require even larger down payments.

Put It in Context

So, if you are a seller, what does this mean to you? Just because things are starting to get back to normal doesn't mean you lost out on the ideal selling opportunity. You should take advantage of today's sellers' market and make your next move with increasing equity and cheap loan rates.

Even though the housing supply is beginning to rise, it remains at record lows. Therefore, a good time to sell your home. 

Connect with our expert lawyers at the Law Offices of Joseph Marino, PC, about how you may sell your home today and take advantage of the low inventory to receive the best terms available.