What’s Causing The Lack Of Inventory?

October 31, 2016

Many renters are being held back from owning a house because of less-than-stellar credit. Homebuilders know that pain.

Hal Bundrick, a contributor to Redfin, writes that homebuilders are having issues with lending, and that has been the chief cause of the inventory shortage across the country. During the housing crisis, banks were burned with construction and development loans on residential homes, so today there are fewer builder loans for land acquisition, lot development and construction.

Other reasons for the housing shortage include land costs and an aging labor force.

Things are getting better. The gap between available home inventory and demand is slowly shrinking. “We’re effectively just shy of 60 percent of the way back to normal conditions,” says Robert Dietz, chief economist for the National Association of Home Builders. Dietz says the housing industry will be in good shape when it hits 1.3 million single-family starts per year — but that might take another three to four years.

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