Housing Supply

Several states, Nevada, Arizona, Florida, and California have been in a housing and economic depression. Most states are not producing new homes to keep pace with the increase in population and demographic changes. This illustration breaks down the national supply problem to the state level.

This issue seems to be overshadowed by the fact that there are over 3,500,000 homeowner delinquent on their mortgage loans and 2,500,000 homes stagnated in the foreclosure process.

The homeowners facing the above problems may be or will be displaced from their home. However, they will move somewhere i.e. move-in with a relative, rental apartment, become homeless. They may even move to another state to start over. The displaced homeowner becomes pent-up demand – not now but after their credit is restored in about three years. Some of these homeowners will never buy a home again.

The new housing starts meet the need of the increased population, family formations and replacement of old housing stock. The supply of new homes will be (is) a problem. The lack of new housing supply is being overshadowed by the economic impact on current owners, i.e. foreclosure, short sale, loss of job, taxes, etc. When the economy regains traction and trends positive for months, the supply and demand curve will shift dramatically and significantly.

The buyers that wait and react to the shift in the market will have a higher cost of homeownership than those buyers that act NOW.