There is a massive housing shortage in America right now – and every agent and lender should be sharing this data with every nervous homebuyer.
In a recent blog, I mentioned that over 80% of consumers think now is NOT a good time to buy. This is both because of today’s higher rates AND because many consumers fear that we will see a repeat of the 2008 housing crisis.
But, according to real estate experts like Ken McElroy and Jason Hartman, we are facing the exact opposite problem that we faced in 2008 – because new housing units coming online have not come close to keeping up with household formations and/or population increases.
Ken McElroy is a very reliable source, as he is a true real estate expert who focuses primarily on commercial and multifamily projects. He’s exceptionally successful already, and he has no reason or incentive to mislead residential buyers.
Housing Shortage Of 5 To 6 Million Units!
In this recent video, A Once-in-a-Decade Real Estate Event is Here, Ken explains why we have a shortage of 5 to 6 million housing units right now!
The reason is that we need to build 1.5 million units per year just to keep up with population growth, but we have not come close to 1.5 million units for any year since 2008.
I “borrowed” a chart (TOTAL HOUSING UNITS) from Ken’s YouTube podcast that shows the number of housing units constructed annually since 1968.
The chart is copied below, and it clearly illustrates how much we’ve underbuilt since even 2007.
500,000 Listings Now Vs Normal Level Of 2.6 Million
The National Real Estate Post also touched on this in a recent video: The Housing Crisis Facing America.
They pointed out that we currently have only about 500,000 homes listed for sale, which is far below the “normal” level of 2.6 million.
And of those 500,000 listings, many are teardowns, making the shortage that much more acute.
They very tellingly showed this chart from the St. Louis Federal Reserve: New Privately-Owned Housing Units Started: Total Units (also copied below).
The chart shows housing starts since the late 1950s – when the U.S. population was about 175 million.
What is so telling though is the fact that our housing start numbers have been lower in recent years than where they were in the 1950s, but our population is now north of 330,000 million (155 million higher than in the 1950s).
TLDR: Not only will the housing shortage ensure there won’t be a “crash,” but it also makes homebuying now the opportunity of a lifetime (per Ken McElroy).
Even worse for potential buyers on the sidelines (who continue to rent), the housing shortage will make rents go up that much more.
Total Housing Units Constructed Since 1968 (Stolen Shamelessly From Ken McElroy’s Podcast)
