Coming soon to a town near you…..a housing shortage?

st louis realtorFirst off, no I have not lost my mind, I can actually support the idea that there may be somewhat of a housing shortage soon but, as the headline implies, I don’t necessarily think it’s going to happen in St. Louis, unfortunately. However, its’ a distinct possibility in many  markets throughout the U.S. particularly those with population growth and an increasing supply of jobs.

When the real estate market crashed, back in 2007-2008, there was an oversupply of homes on the market including a large inventory of new homes. However, as the chart below shows, new home construction came to a screeching halt, with production dropping to about one-third of the 1.5 million new homes per year the prior few years had averaged.

new home starts versus population growth in us chart

Now, as the housing market struggles to slowly improve we are seeing many markets around the country that are starting to become sellers markets as a result of the lack of inventory of homes for sale. The economy still has many would-be home buyers sitting on the sidelines but it is believed by many that, once we see some sustained improvement in the economy and with jobs, we will see an onslaught of home buyers. Since new home construction has been at historically low levels now for several years that lays the ground work for a possible shortage of housing.

The coming shortage of housing:

To see just what impact the lack of new home construction is having and will have on the overall housing market, I took a look at 50 years of housing data to see what the normal rate of growth in housing units in the U.S. has been (new as well as existing homes) . What I found is, during the period from 1966 through 2006 the median increase in housing units was 1.5 percent per year in the U.S. It just so happens in 2007 the increase in housing units was 1.5 percent from the year before so I decided to start there and see what has happened since.

As the chart below shows, 2008 actually added “extra” housing stock to the inventory over the norm but then in 2009 there weren’t even enough homes built to offset the housing units removed from inventory by demolition, redevelopment or other reasons. Then, in 2011, things picked up with housing units increasing in the U.S. 1.3 percent from the year before, but leaving us with a cumulative shortfall from the norm of over 300,000 homes for the three year period ending in 2011. The real blow came last year though as the number of housing units increased just 0.4 percent or, less than one-third of the median increase in the prior 50 years, leaving us with a cumulative shortfall in housing units for the period of 2009 through 2012 of over 1.5 million units.

the coming housing shortage

© Copyright MORE, REALTORS – All rights reserved - Source: U.S. Census Bureau

I don’t think we will see the effects of this shortage for a little while as, even though my first chart shows the U.S. population increasing at a steady rate, household formation has been down as people choose to live with family, add roommates, etc due to the down economy but, once things perk up in the economy I believe we will see this change quickly.


Print Friendly, PDF & Email

18 comments to Coming soon to a town near you…..a housing shortage?

  • We are planning to move to the Philadelphia area soon. Our ideal place to live (does it exist?) would:
    – have a black population >20%
    – be a train ride away from downtown Philly
    – be a self-contained small town, not just suburban sprawl or an extension of the city
    – have affordable houses
    Thanks for any suggestions.

    Edit: Chester or Darby were suggested, but these are extensions of the city, not self-contained small towns.

  • Hey! I’m at work browsing your blog from my new iphone 4!
    Just wanted to say I love reading through your blog and look forward to all your posts!
    Keep up the superb work!

  • I was curious if you ever considered changing the page layout of your website?

    Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content so people
    could connect with it better. Youve got an awful lot of text for only having 1 or
    two images. Maybe you could space it out better?

  • It’s awesome to visit this web page and reading the views of all
    mates concerning this piece of writing, while I am also
    eager of getting experience.

  • Great article! This is the type of info that are meant to be shared around the internet.

    Disgrace on Google for no longer positioning this post higher!
    Come on over and seek advice from my site . Thank you =)

  • I’m curious to find out what blog system you have
    been working with? I’m experiencing some small security issues with my
    latest site and I would like to find something more safe.
    Do you have any suggestions?

  • Hiya! Quick question that’s completely off topic.
    Do you know how to make your site mobile friendly? My blog looks weird when browsing from my iphone4.

    I’m trying to find a theme or plugin that
    might be able to correct this problem. If you have any suggestions, please share.


  • Fine way of describing, and nice paragraph to take facts about my presentation topic, which i am going to present in institution of higher education.

  • A person necessarily assist to make severely articles
    I’d state. This is the very first time I frequented your website page and so
    far? I surprised with the analysis you made
    to create this actual submit extraordinary. Wonderful job!

  • Hi, everything is going nicely here and ofcourse every one is
    sharing data, that’s in fact fine, keep up writing.

  • I love what you guys are up too. This kind of clever work and coverage!
    Keep up the amazing works guys I’ve incorporated you guys to blogroll.

  • At this time it appears like Movable Type is the preferred blogging platform out there right now.
    (from what I’ve read) Is that what you’re using on your blog?

  • Quality posts is the important to interest the viewers to pay a
    visit the website, that’s what this web site is providing.

  • Hi, yup this paragraph is truly pleasant and I have learned lot of things
    from it concerning blogging. thanks.

  • Spot on with this write-up, I really believe this
    web site needs much more attention. I’ll probably be returning to read more, thanks for
    the information!

  • Everyone loves what you guys are up too. This sort of clever work and reporting!
    Keep up the fantastic works guys I’ve incorporated you guys to

  • It’s remarkable in support of me to have a website, which is good in favor of my know-how.
    thanks admin

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>