The pickings are slim for affordable housing today — and they’re about to get slimmer. Here’s why lower mortgage rates are causing an epic housing shortage.
National housing inventory fell 2.5% annually in September, a sharper decline than August's 1.8% decrease, according to realtor.com
Potential home buyers walk past an 'Open House' sign displayed in the front yard of a property for sale in Columbus, Ohio.Anyone out hunting for an affordable home today knows that the pickings are slim – and they are about to get slimmer. Supply has always been leanest on the low end, as investors have been very active in that price range since the foreclosure crisis.
The demand is being fueled by lower mortgage rates. The average rate on the 30-year fixed surged over 5% last November and stayed above 4.5% through March, according to Mortgage News Daily. That made for a lackluster spring housing market, traditionally the busiest time for buying. The nation's homebuilders are not helping the situation much either. Single-family housing starts have been rising very slowly, but mostly in the move-up and luxury segments of the market.
"We've faced what has been called a perfect storm of supply side challenges," noted Dietz. "There has been an ongoing labor shortage, we lack the necessary land and lots to build homes, we've had building material cost concerns, and then probably the most important factor has been higher regulatory costs since the great recession."
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