The beginning of 2020 shows a promising outlook for the U.S. housing market.
Within the span of 7 years (2012 to 2019) 5.9 million homes were built within the United States. During that same time period, over 9.8 million new households were formed within the US.
Although some of these households have been able to purchase homes from families moving out of the US or from unoccupied homes, there is still a rather significant deficit between the number of homes built and the number of people needing homes within America.
Explaining The U.S. Housing Deficit
Why is the housing deficit so large though?
As expected, the main culprit seems to be the great recession in 2008. In the years leading up to the market crash, loans were being granted to high-risk clients. Since these loans were available to virtually anyone, people began buying homes that they would not have otherwise been able to afford. When this happened, home construction companies responded in kind by building millions of homes within a short time span to try and meet the market’s demand.
In 2005 alone, there were over 1.7 million homes built according to the U.S. Census.
When the mortgages on these homes began defaulting in the following years, the market started to crash. This led to many homes going into foreclosure and brought the building and selling of homes to a virtual halt.
Now that demand is once again climbing, construction companies are less inclined to immediately meet the demand of the market for fear of repercussions, which has led to this huge deficit in the market. That being said, this means that homes being listed on the market are selling quickly and we could even predict that this movement will accelerate as the demand continues.
U.S. Housing Market Trends - What's In Store For Buyers & Sellers
What does this mean for consumers then?
Well, if you are considering selling your home the market is leaning in your favor right now.
That being said, there is no way to tell what the future of the market has in store. Right now, knowing the market currently searching for houses, we may see smaller homes that are more eco-friendly and energy-efficient being built in the very near future as well as a potential population shift towards areas of the country with lower living expenses.