Yes, Marcus & Millchamp CEO Hessam Nadji told CNBC in a recent report.
In an attempt to avoid a repeat of 2008’s devastating market crash, lenders and builders have taken more conservative approaches to how they are doing business. Builders have and will continue to reduce speculation, while lenders have become notoriously tight with purse strings since 2008.
The 2008 crash left a veritable wasteland of construction projects left unfinished. Money and financial backing had simply dried up. Entire spec neighborhoods sat unfinished in many areas of the country.
In November, there were a mere 1.66 million homes on the market, the lowest ever for a November, according to the National Association of Realtors. Housing supply is down nearly 6 percent from the same period in 2018. We all know how supply and demand works. When supply is low and demand is high, prices can skyrocket. And they have. The median sales price for existing homes in November was $271,300. It’s another record, according to NAR.
The housing shortage, which may be the 2020 crisis headline, is more of an issue in the starter home category. Supply is down 15 percent for homes priced less than $100,000, which is why real estate rentals and construction of rental properties is booming, even in Charlotte. Supply for homes priced $100,000 to $250,000 was down 7 percent annually.
Builders are focusing on more high-end homes to increase profitability, which is partially to blame for the shortage of starter homes available. According to Najdi to CNCBC, that is a problem on both the for sale and apartment rental markets.
Nationally, housing supply is only growing on the high end, where demand is naturally the lowest. A stronger job market and lower interest rates are fueling market demand.
The United States is the land of plenty, but we do not need to see the over-leveraged and overbuilt houses of 2008. While extremely frustrating for home buyers, Nadji told CNBC it’s a smart economic move for the country. For the full report, see CNBC.