California Cities Lead The U.S. In Low Housing Inventory
As local job markets continue to expand, the pool of homebuyers will only increase.
Prospective homeowners and home renters in San Francisco and San Diego continue to find it a challenge to find available properties to purchase. So what’s behind this frustrating home shortage? Slow housing turnover and a diminishing supply of buildable, distressed properties play a significant part. But according to the National Association of Realtors (NAR) it is the the low level of new home construction that is one of the largest factors behind the shortage.
New research from NAR confirms that the volume of new home construction relative to the larger number of newly employed workers is considerably lopsided. This is proving to become a widespread issue, with 146 metropolitan statistical areas (MSAs) throughout the U.S. underperforming in roughly two–thirds of measured metro areas.
“Our research shows that even as the labor market began to strengthen, homebuilding failed to keep up and is now contributing to the stronger price appreciation and eroding affordability currently seen throughout the U.S.” says Lawrence Yun, NAR chief economist.
And as most California natives will tell you, the homes that are available will cost you. “Affordability issues for buying and renting because of low supply are already well–known in many of the country’s largest metro areas, including San Francisco, San Diego and New York.” says Yun.
Looking ahead, Yun says there’s no question the homebuilding industry continues to face many challenges including; rising construction and labor costs, limited credit availability for smaller builders and concerns about the re–emergence of first–time buyers.
However, Yun forecasts that, “As local job markets continue to expand, the pool of homebuyers will only increase.” And indeed, we are beginning to see small, but measurable gains in single–family housing starts. “The demand for buying has drastically improved this year and is propelling home sales to a pace not seen since 2007.” says Yun.
Yun indicates that it is crucial builders to immediately shift their focus from apartment construction to the home market. Otherwise, Yun predicts that severe housing shortages and faster price appreciation will remain a burden for buyers trying to reach the market.