The media tells us that there is a glut of housing on the market. We hear regular alarm bells about “overhang” and foreclosures sending housing prices down further. But do the alarms match reality?
According to a report in Calculated Risk (Dude, Where’s my inventory?), the inventory of housing is down 22 percent from the same time last year. Read the entire report at Calculated Risk by clicking here.
According to an article on HousingWire.com, the inventory of of new and existing homes for sale are at their lowest levels since 2006. HousingWire reports that the inventory or existing homes will take just 6.1 months to turn over, and the inventory of new homes is just a 5.6-month supply.
Read the entire report at HousingWire.com by clicking here.
There has been considerable commentary from the media and some economists that what is driving the continuation of the housing market downturn is an over-supply of homes. However, NAHB economists report that home builders have under built since 2008 in terms of production necessary to meet demand.
Karl Smith, an assistant profession of behavorial sciences at the University of North Carolina Chapel Hill, writes in the Atlantic that “America is closer to a housing shortage than a housing surplus.”
“The prices of houses rose to extremely high levels during the 2000s. However, total home building did not. What was noticeable about that period was the fraction of homes that were site-built single family homes, rather than duplexes, apartment buildings or mobile homes. However, the total amount of homes built barely reached records. In absolute terms not many more homes were being built in 2005 than in the early 1980s when the population was smaller and immigration less of a force.”