Core Concepts
It is currently a challenging time to buy a house due to high prices, low inventory, and increasing mortgage rates. The housing shortage and frozen market are expected to persist for years.
Abstract
In today's real estate landscape, buying a house has become an arduous task due to soaring prices, limited options, and exorbitant mortgage costs. Across the country, the housing market is characterized by scarcity, unaffordability, and stagnation.
The dwindling availability of homes suitable for buyers exacerbates the situation further. The aftermath of the Great Recession led to a prolonged period of underbuilding, resulting in a significant shortage of starter homes nationwide. This scarcity has driven up costs significantly for both buyers and renters alike.
The onset of the pandemic brought about unprecedented changes in the housing market dynamics. Low-interest rates spurred a surge in home sales initially, but subsequent inflationary pressures caused by supply chain disruptions led to increased prices across the board. The current equilibrium is marked by high prices, limited inventory, and reluctance among buyers and sellers alike.
Despite expectations that easing borrowing costs would alleviate the situation, experts predict that any respite will be short-lived. The underlying issue of housing shortage remains unresolved, with insufficient supply relative to demand continuing to drive up prices.
Efforts to promote housing development through legislative measures may offer some hope for increased supply in the future. However, these initiatives will take time to materialize while demand continues to grow unabated.
For prospective homebuyers caught in this predicament, options are limited - from buying in cash or with substantial down payments to resigning themselves to renting indefinitely amidst an uncertain housing market outlook.
Stats
New York has 1.1 million housing units.
Real estate agents had 2.2 million vacant housing units available 15 years ago.
Currently only 732,000 vacant housing units are available despite adding 30 million people.
Monthly payment on a new home has increased by more than 50% in three years.
Freddie Mac estimates a shortage of 3.8 million starter homes.
Two out of every three buyers in Manhattan paid cash this spring.
Quotes
"It’s not going to be a good time to buy a house for a really long time."
"Nobody’s selling because nobody’s buying."
"Until there’s considerably more supply relative to demand, things are not going to feel good."