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Three Reasons There Is No Housing Shortage

One of the most recent mantras in the financial media is that housing prices rise because there is an inventory shortage. While it is an excellent headline for “getting clicks,” there are 3-reasons why there really is NO housing​​ shortage.


As we head into 2021, potentially higher rates and continued economic weakness could collide with elevated housing prices in some areas. Such will result in the rapid reversion of “housing activity” and a surge in “supply.”
No Housing Shortage, 3-Reasons Why There Really Is No Housing Shortage
The next time you hear someone in the media saying the housing market will never go down again because of an “inventory shortage,” it may be worth questioning their view.
As with all data, it is crucial to understand the data’s calculation to derive its real meaning. The problem with most analysis by the media is they tend to extrapolate a current data point into an infinite future.
Reality rarely works that way.


  • Yes-but there is a shortage of affordable housing in too many metropolitan areas !
  • carew388 said:

    Yes-but there is a shortage of affordable housing in too many metropolitan areas !

    Not really. Stay away from NY area (NJ, CT) and CA and you will have no problem. The South East is a great place for almost everything.
    Affordable is a relative term, especially for someone like me who came from another country.

  • FD1000 - did you miss the word "affordable"? And I disagree that it is relative nor does it matter what country anyone came from. I'll accept different from what you may be used to.
  • Obviously there's no housing shortage. Anyone needing a house should just move to Detroit and buy one for 5 or 10k. Of course there's the remaining issue of employment in the area, but hell, nothing's perfect.
  • edited November 2020
    In Montana and Colorado it is a severe shortage of homes. Everyone is leaving CA and NY for the wide open spaces. Realtors there will tell you the shortage is unlike anything they have ever seen. Closer to home there is also a severe shortage of homes in the mountains of western NC. Boone, and even more so in places like Seven Devils and Beech Mountain. I offered a young couple $350,000 cash for a vacation home in Seven Devils. A home they paid $225,000 for just this past January l. I was turned down flat. I also wanted a vacation home in Beech Mountain but found one day listings were being met with multiple offers and bidding wars. The longest tenured realtor there said he is flabbergasted on what is occurring there. 2007 was tame compared to this. People from the Northeast are flocking to the mountains. They move their furniture there first and store them in storage lockers while they look for a home.

    Even closer to home in rural KY lower priced homes last but a day or two on the market. In my county homes that had been on the market for six months to a year or longer seemingly were gone in a flash the past several months. Again, people from all over the country are leaving the urban cities for the peace and tranquility of country life. It is like suddenly everyone wants to live in Mayberry. And I can understand. I have lived in Louisville, Dayton, Cleveland, Rochester, Los Angeles, and Reno. But no place can compare to the small rural town here in KY where I have now lived for 24 years. The people rushing to these areas are not into it for flipping or making a quick buck. It has nothing to with interest rates, the economy, etc. It is a lifestyle thing and I don’t see this changing anytime soon.
  • edited November 2020
    Yep, we see an acceleration of people moving from downtown and expensive areas to much cheaper areas. Welcome to the high tech boom of working from home.
    Smaller, remote cities have limited number of houses but there are thousands of houses available the Atlanta metro at $250-500K. If you like smaller and cheaper houses just drive another 20-30 minutes and get the feeling of the countryside.
    You can find thousands of similar houses in cities across the South East in TN,SC,NC,AL.

    See this (link)for the average home value in all 50 states. In many states it's around $200K.
  • "Everyone is leaving CA and NY for the wide open spaces."

    Yup. Everyone is leaving Manhattan for the wide open spaces of ... Brooklyn??
    While Manhattan’s real estate market continued to reel in August, Brooklyn had a near-record number of contract signings, spurred by bargain hunting New Yorkers and pent-up demand from months under quarantine. ...

    “Anything with outdoor space is flying, and renovated townhouses that are priced well are going into bidding wars,” Melissa Leifer, an agent with Keller Williams NYC, said about the recovering Brooklyn market.
    “The urban-to-suburban narrative is actually a Manhattan-to-suburban narrative, or a Manhattan-to-other-borough narrative,” said Jonathan Miller, chief executive of appraisal firm Miller Samuel Inc. Brooklyn activity has ramped up since the end of the lockdown in June, he added.

    It's all relative.
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