If you thought the national housing market was complicated, you might want to sit down, because there’s more to this story.
On June 16, The National Association of Realtors (NAR) published a disturbing report about the deficit of available housing. That report was researched and authored by the Rosen Consulting Group and indicates an under-building gap of 5.5 to 6.8 million housing units since 2001, spanning everything from single-family homes to rental units. This is considered a once-in-a-generation crisis, but the question is, how did this happen?
The report says that from 2010 to 2020, new home construction fell 6.8 million short of what was needed to replace aging units. Limited supply has been a driver of rising housing prices for both renters and buyers, complicated by an increase in demand during the COVID-19 crisis. New home construction surged in the early 2000s, then building activity slowed during the 2007-09 recession after the financial crisis. The industry never got back up and running to its previous level before the pandemic hit.
The supply shortage became worse during the past year as builders slowed construction in some regions and delayed purchasing land because of the pandemic. All of that, combined with low mortgage interest rates and remote work, has led to unanticipated demand for single-family homes. At this point, the consensus is that it would take a decade to close a gap of 5.5 million units.
The NAR report goes on to say that the lack of new construction and under-investment has led to an acute shortage of available housing that is a detriment to the health of the public and the economy. They say the gap is so enormous that it will require a major national commitment to build more housing of all types and they are attempting to persuade lawmakers to include housing investment in any infrastructure package enacted. This could include removing barriers to new construction and creating incentives for builders and investors to pursue new housing development.
The NAR’s chief economist, Lawrence Yun, says there is a strong desire for homeownership across this country. However, the lack of supply is preventing too many buyers from moving forward, thus requiring dramatic action to close the gap.
May’s Manatee County sales statistics are out as reported by the Realtor Association of Sarasota and Manatee, so let’s take a look.
Manatee County single-family homes closed 66.1% higher than last year and cash sales were up 168.9%. The median sale price was $400,000, up 23.1%, which is almost the same as the national increase of 23.6%. The average sale price was $567,549, up 38.8%, the median time to contract was six days, active inventory was down 71.7% and the month’s supply of properties was .06 months.
Condo sales were up 112.7% more than last year and cash sales were up 250%. The median sales price was $243,595, up 5.9%, and the average sale price was $312,244, up 19.4%. The median time to contract was nine days, active inventory was down 78.5% and the month’s supply of properties was .06 months.
Regardless of these surging numbers, the president of the Realtor Association, Alex Krumm, points out that Florida real estate remains on par or less expensive than the markets from which people are moving. This is keeping our market very desirable and active with little change in sight.
A once-in-a-generation crisis sounds extreme and we in Florida may not feel it to the same degree as people in other regions of the country. But for many, it is a disruption of a life-long goal and for others, it is a more serious crisis.
