As economy recovers, credit crisis might cause housing shortage
A housing shortage will likely be another effect of the housing bubble, despite the housing market crash, foreclosure epidemic, credit crisis, massive unemployment and other hardships fade. When the U.S housing market crashed and took the rest of the economy down with it, numerous of the different banks stopped home lending, home buyers stopped getting and home builders stopped building. Even apartment construction has dried up. Even with a glut of housing inventory in 2010, a housing shortage in 2011 is forecast when a growing population exceeds accessible shelter.
Article Resource: Credit crisis will cause a housing shortage as economy recovers By Personal Money Store
Market crash shorts housing
A housing shortage in 2011 could happen as the economy recovers, jobs are created and the desire to create new households comes back. According to CNNMoney.com, the nation is not building enough homes to keep up with potential demand. Just 672,000 new homes were began in April, which is less than half the long-term rate that could be needed to meet population growth within the U.S. The housing shortage, which may already exist, has been masked by the housing market crash. Job creation and home buyers will return together. Pent-up demand could catch the U.S. housing market off guard, leading to a housing shortage and soaring home prices.
Housing inventory probably won’t keep up
A housing shortage seems unlikely as the U.S. housing market is preoccupied with foreclosures and surplus inventory. But Forbes.com reports that if The US can't regain its focus on developing homes, the housing market could have a much bigger problem. Brian Wesbury, who is the chief economist at First Trust Advisors, told Forbes that 1.5 million houses a year have to be built to keep up with population growth. Current inventory of homes is enough to accommodate the housing market for about 7 months.
It appears the credit crisis has handcuffed the homebuilders
The housing shortage is boosted by the credit crisis. As outlined by the Los Angeles Times, home buyers aren't the only ones who have to deal with tight-fisted banks. Builders are having difficulty borrowing the money they need to buy land, develop lots and construct houses. Most builders have decided not to start houses today until they either have nothing else to sell or buyers have an approved mortgage application in hand. A builder is more likely to get credit now with a solid contract from somebody who has a mortgage.
Worse rental market lack
The housing shortage is probably going to hit the rental market worse. According to the National Association of Home Builders, new multifamily construction has been crippled by the credit crisis. That leaves the industry unable to meet the increased need for market-rate and affordable apartments that is expected to accompany economic recovery beginning next year. The two- to three-year timeline required to build apartment communities won't be soon enough for a large number of Generation Y professionals and newly formed households expected to need them.
Lock in low rent right now
The apartment shortage and elevated demand will result in greater rents. Mai Ling Slaughter at MSN.com says the current market is on the renter's side, with vacancies at a 30-year high and plenty of perks accessible for both present and completely new tenants, but it could all come to an end soon. Now is the time that you need to use to sign an 18 to 24 month contract.
Read more on this topic here
CNN Money.com
money.cnn.com/2010/06/15/real_estate/new_housing_bubble/?npt=NP1
Forbes.com
realestate.msn.com/article.aspx?cp-documentid=23505825
LA times
latimes.com/business/realestate/la-fi-lew-20100613,,7268736.story
