The housing inventory shortage might well become the main driver behind the US housing market in 2018.
According to a market projection published by Zillow yesterday, historically low availability levels could continue driving up prices and become the biggest single problem Millennial home buyers must face.
Across the nation, there are now 12% fewer residential properties to select from than there were at the same time last year. More than 67% of the homes that are for sale are in the top third, where the most expensive homes can be found, making them unaffordable to the average Millennial.
This is not only hitting Millennials very hard. Many other home owners have become too afraid to sell because they fear they will not be able to find an affordable home again.
While a 4% price increase is expected next year - compared to this year’s 7% - this is still higher than the 3% that is considered to be “normal”.
In the release, Zillow Chief Economist Dr. Svenja Gudell said: “Homeowners who are looking for a change will turn to remodeling and redecorating instead of selling their home and facing the challenges of being a buyer in a seller’s market.”
The best way to solve the availability crisis may be to build more homes, but building levels have hovered well below historical averages over the past few years, while regulations and land prices have made it very hard for developers to build affordable housing in most American cities.
Between now and next year, builders will have no choice but to focus their efforts on building more homes for first-time buyers.
A new boom in the entry-level market will undoubtedly boost home construction in the suburbs, further away from city centers. These new houses will be aimed at both Baby Boomers and Millennials.
Gudell said: “Wide hallways can make it easier to move in, as well as make it easier to navigate a stroller or wheelchair through the halls. Large drawers will replace cabinets, making it easier to access everyday items that previously were hard to reach.”
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