LATEST NEWS

Young Buyers Despair As Shortage Of Houses Causes Prices To Rise

Fears of a housing bubble are being stoked by double digit price gains across the nation.

By Jeff Vasishta February 14, 2017

Although the explosive New York market appears to have cooled during the last year, in the rest of the country, real estate’s jet engines are still firmly strapped on, fully fueled and sending prices skywards. The main reason is that there just aren’t enough homes to go round. According to a recent article on Realtor, in the fourth quarter of 2016, the number of homes for sale fell to the lowest level in nearly two decades, creating a coastal bubble that shows no sign of deflating. Great news for home flippers, terrible news for first time buyers.

The average price of a single-family home increased in 89 percent of metropolitan areas in the fourth quarter compared with a year earlier, the National Association of Realtors said. Adding further fuel to talk of a bubble, more than half of the 178 markets included in the report have now reached or surpassed their previous peaks. There were 1.65 million homes available for sale, 6.3 percent less than the same quarter a year earlier.

RelatedBrooklyn Is King Of New York When It Comes To Decade Long Price Increases

Also, 17 percent of metro areas experience a double digit increase from the year before—14 percent alone in the third quarter. Cities caught up in the upward maelstrom included Portland, as well as Orlando, Nashville, Memphis and Cincinnati. But why is there a shortage of houses? Surely real estate is supply and demand. If people want more houses, why can’t developers build them? There are several reasons.

First, after the last housing crash, many people lost the appetite to buy and sell houses. This, in turn, has caused a stagnancy in certain areas. Second, credit has remained tight and high down payment requirements have locked some new buyers out and kept them as renters. Finally, landlords are reluctant to sell and release their rental properties into the market for owner occupants because high rents have been a boon for them.

RelatedWhy Lisbon May Be Europe’s Best Kept Real Estate Secret

Home builders can’t keep up. According to Forbes, “about 1.1 to 1.2 million net new households are formed each year. So that is the number of new homes needed to be built just to accommodate this rise in housing demand.” Added to that number are the 3-400,000 dilapidated properties that go the way of the bulldozer. So, the total number of new homes needed is about 1.5 million per year. From 2007-2016, the annual number built was just over half that number at 870,000.

California is where the biggest gains have been happening. The Silicon Valley/San Jose area continues to gain altitude price wise. The median price of a single family-home there is now over $1 million. San Francisco is a close second. Anaheim and Honolulu were third and fourth.

Nationally, house prices were up 5.7 percent over the same time last year. Unlike the bubble of 2008, this boom seems set to run for a little while longer. At least, until there’s enough new housing to go round.

Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

Jeff is a writer, husband and father but not necessarily in that order. As a music journalist he counts Prince, Beyonce and Quincy Jones amongst those he’s interviewed. He's also owned and flipped homes in Brooklyn, NJ, CT and PA.

  • AGORAFY
    Stefano Boeri, the architect mastermind behind the famous plant-covered skyscrapers, is now designing Forest Cities in Liuzhou, China. #ForestCity #China https://goo.gl/PsTUwv
  • AGORAFY
    Auction is the second scheduled in a month for a One57 unit and it could set a NYC foreclosure record. #BillionairesRow #Foreclosures https://goo.gl/NZ3zqD
  • AGORAFY
    Once a couch-surfing website, Airbnb moves on to luxury properties, further disrupting hospitality industry. #Airbnb #Luxury https://goo.gl/7TpLk6
Four Countries To Retire In With $200K In Savings—And How Much Real Estate Costs There
Ever dreamed of retiring abroad? You know, affordable healthcare, better climate, more positive news—becoming an expat seems like an enticing option, especially one you no…
While Other Real Estate Platforms Start Charging Agents $3-Per-Day Exposure Fee, Agorafy Remains Accessible To All
Real Estate searching platform are always finding news ways to diversify their revenues models. Case in point—on Tuesday July 18, Streeteasy, one of New York…
Is Real Estate Crowdfunding The Fix That Urban Housing In America Really Needs?
Saving money for a down payment? One can only hope. Most millennial in their twenties or thirties are mortified that they might never be able…
Brooklyn And Queens’ Real Estate Sub-Markets Continue Their Ascent To The New Heights
So, the sales prices in Brooklyn and Queens hit record highs. Again. Just like they did in December 2016 and at the end of this…
The Economy Of Car Services And Delivery Apps Might Be Making NYC Less Eco-Friendly
Living in an eco-friendly neighborhood is a good thing. And, as it always the case with the good things, it also costs more. High rents…
Building Communities: What The U.S. Developers Should Learn From Soho China
As our world emerges into the new period of globalization and technology, some of the most important by-products of this process are buildings that have…
Five Reasons Why All Entrepreneurs Must Keep Their Eyes On China
It is hard to overestimate the importance of Chinese influence on the modern global economy. Carving out a place in Chinese market and winning over…
Airbnb Up Their Game With A New Luxury Tier Featuring Mansions And Villas
Airbnb is about to seriously up their game. First, the company started testing a new service called Select in an attempt to push accommodation listings…