Real Estate has been inarguably unpredictable in the past few years; we’ve seen some lows and we’ve seen some super lows. Unfortunately we’ve become accustomed to a market filled with houses, where the buyer has their pick, and sellers are happy to just receive an offer, even a low ball or unreasonable one. So would you believe us if we said that our market may make a drastic shift towards a housing shortage?

Real estate is often described as a cyclical market; one that has its steady ups and predictable downs, with plenty of average or level years in between. So to say that we could go from one of the biggest housing crashes to an immediate shortage would blow people’s minds, but it may not be so crazy. Many analysts are starting to believe it’s exactly what we’ll see in the next year to three years.

If we look at some of the most recent trends, comparing the second quarter of 2011 to the second quarter of 2012, we can easily see that existing homes are up 8.6%, existing inventory for sale went down 24.4% and that median home prices shot up by 7.3%. These numbers are fairly drastic for one short year.

A more important indicator of a possible shortage is the history of housing construction in the U.S. According to the U.S. Census, housing construction has been relatively consistent with the growing population. Between one and two million homes were produced since 1968. The year with the greatest output of new homes was 1973 and the lowest was 1982 with 1,005.500 homes. On average, there were 1,531,000 homes produced between 1968 and 2008.

Between 2009 and 2011, however, there have been only 647,600 homes built, on average, each year. These statistics combined with a recent study released by the Joint Center for Housing Studies at Harvard University, stating that we need between 1.18 million and 1.38 million housing units per year to meet our current demand help to prove the housing crisis we can expect. That plus the fact that housing is more affordable than ever and that interest rates are at record low indicate just how active the market may get. Ironically, it seems that the first markets to experience the housing crisis in 2007 and 2008 are also the ones that are starting to see the shortage in 2012. Markets in Florida, Arizona, Nevada and California have seen a sharp decline in houses in the $0-$100,000 range—up to 40% already!

For more real estate news and to keep up to date on our Baker real estate listings, contact us at PorchLight Real Estate Group.

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