America’s Housing Shortage
America has never experienced this severe of a housing shortage crisis since the end of World War II. Now faced with sky-high rent prices, an undersupply of rentals and an acute housing deficiency looming, experts fear what could be next to come.
Homebuilding rapidly declined when the housing bubble burst in 2006 to 2007. Homebuilders, unable to obtain loans, simply stopped their current projects and were forced to watch the housing market fall. However, housing prices have recently soared and inventory is scare. In fact, housing now accounts for approximately 35-percent of household expenditures. This amount is an increase from the 30-percent in 1985. This is a startling figure considering that apparel, food and transportation have continued to stay the same or drop during the same period.
Rent prices have increased – factoring inflation – a whopping 14.7-percent. In high-priced rent markets, such as San Francisco, Miami, New York and Los Angeles, the average renter spends approximately 42 to 48-percent of income on rent.
Several cities are being forced to expand their housing options, especially those areas that have seen significant job and population growth. Austin, Texas, issued enough housing permits to be equal to 11.5-percent of their existing house base in 2010 alone. Their new construction market is equally divided between single-family homes and multi-family units.
Other top cities to be ahead of the housing market include: Raleigh, NC; Houston, TX; Charlotte, NC; Orlando, FL; Nashville, TN; Dallas, TX and Jacksonville, FL.
Unfortunately, loans are still difficult to obtain. Real estate development loans are even harder for builders, which puts new housing in even more of a predicament. Even home flippers are looking for money, as banks are becoming more selective about the projects they will fund. Additionally, if banks consider loaning on new construction or extensive remodels, the loans can take several months to be approved.
The term “hard money lender” is becoming more common. It is mentioned on television remodeling shows when bidding on foreclosures because it provides instant access to money without the hassle of dealing with underwriters.
Direct lenders are helping to boost the economy, making it possible for booming cities to fulfill necessary housing needs. This is essential to having a healthy economy that provides housing for residents, which helps keeps jobs local.
With so many builders needing a fast turn around time and having such a minimal time to complete construction, they cannot wait for approval or disapproval from bank underwriters. Sometimes businesses have to act now to help stabilize our economy.