How Many More Homes Do We Need To Meet Current Demand
Q: Gerald, you’ve said many times that home prices keep rising because housing inventory is so low. How many more homes do we need to meet current housing demand? Ezra, Old Tappan, NJ
A: Median existing US home prices are up a mind-blowing 19% due in large measure to housing shortages. In a recent NAR (National Association of Realtors) study, the housing shortage we face now is about 5.5 million housing units! There are about 140 million total housing units in the US so 5.5 million is a sizable shortage. The study shows that the shortages exist in all categories of residential housing. The 5.5 million unit housing deficit includes a 2 million shortage of single family homes, a 1 million shortage of 2-4 family homes and about a 2.5 million shortage of multi-family homes with 5 or more units. The housing shortage has driven prices higher both for renters as well as home buyers. Hopefully, the housing shortage may improve slightly in the 2nd half of 2021 as we reach herd immunity to COVID-19 and more owners feel comfortable putting their homes for sale on the market. Regardless, more than anything else we need much more housing construction and we need to repurpose vacant commercial properties for residential use to address the 5.5 million housing unit shortfall. Thanks for your question, Ezra.
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