Are you a first-time home buyer, or wanna-be first-time home buyer? Have you been paying rent for too long at a place you share with other families? Has your rent been going up? When will it end, you think? Have you actually been out looking, only to give up in defeat with so few homes for sale? Have you actually made an offer on one or more homes and been demoralized by someone else out-bidding you?

You are not alone.

There is hope for you, but it might be helpful to know why this might be happening.

More People, Fewer Homes

It’s sometimes hard to remember that our population is going up, which means more people need to find a place to live. At the same time as more new people need housing, the housing market is still recovering from the crisis of 2008 - in a number of ways I’ll mention below - which means new dwellings aren’t being built at a fast enough rate to keep up with population growth. This includes rental units and single family homes, which is why we see a rise in rental rates. It’s all related.

Apprehensive Lenders

The reason more new homes aren’t being constructed is that builders are struggling just as much to recover from the housing crisis of last decade as homeowners and lenders. Most builders are small businesses, which mean they are going to the same types of lenders, like local banks, as homeowners. Lenders are understandably much more wary. It’s harder to obtain a loan than it used to be. In addition, everything about housing costs more. Available land is hard to get, plus if they buy the land, builders have to wait for permits and zoning and provide infrastructure like roads and sewers.

Lack of Skilled Labor

Many of the skilled tradesmen working in construction before the 2008 crisis had to find new trades and jobs when new home construction fell and many residential builders had to go out of business. The industry is down about 900,000 in skilled tradesmen, according to the Nation Association of Home Builders.

These factors and more have led to a shortage of housing and have driven up the prices of homes much faster than the rate at which incomes are rising. However, there is hope.

According to the U.S. Department of Commerce, about 650,000 new single-family homes were completed in 2015. Builders began to work on about 115,000 new homes in October of this year, which was a 21% jump from September and a 26% jump from the same month last year. In October, the rate of construction had risen 57% on multi-family dwellings (rental buildings) from September and 31% from last year. Also, about 97,000 homes were finished this fall - signaling a 6.5% increase from earlier in the year and 8.5% from the previous year.

What does all this mean?

It means there might be an end in sight. We may be seeing the beginning of the housing market getting easier. If you are in the market for a new house right now, the holidays could be a good - if counterintuitive - time to look again. Sellers may be more motivated in the winter months. As always, if you have any questions give us a call today!