The Expert Podcast

Okay the headline sounds good but it still could be a major disaster for home availability headline new home construction surges amid higher lumber prices so let's talk about what they mean by surges first of all and why doesn't not even going to put a dent in the real estate market it's a 12 increase that's a surge okay maybe that's that's true but the annual rate is 1.71 million so what's 12 percent of 1.71 million let's round it off and call it about 200 000 houses so the annual rate went up 200 000 houses well what kind of dent is that going to put in how many houses are needed.
Well it talks about the different percentages and housing starts and different areas but the big number is that there is a nationwide shortage of roughly 5.2 million single family homes based on current demand so if the market only is going to add another 200 000 houses a year over what it was building before well five million houses two hundred thousand it takes five years to get to a million so it would take 25 years to swallow up that 5.2 million houses now it's not going to take 25 years to get there but the 200 000 extra homes is a drop in the bucket if you're missing five million single-family homes in the marketplace.
And it says you know with this landscape new construction is the missing link well that's the economic research at realtor.com they're trying to boost up the market millennials are driving the strong demand as they enter their hot prime home buying years right they're they're entering their home buying years they're not in it they're entering their home buying years construction firms are facing other challenges lumber prices are at 1100 per thousand board feet it used to be 400 just this summer not only does that slow down construction but it makes it more expensive so the house costs more.
The takeaway is even though it seems like it's a surge 12 percent up that 12 percent only adds 200 000 houses to the market even if all of the houses 1.71 million went into swallowing up that five million shortage that would still take three years that's not counting the additional houses that are going to be needed in the next three years the five million house shortage that's in in existence already so it's going to be many many years four five six years until there's equilibrium in the housing market.
You're not going to be able to build them any faster there's not any more workers not any more contractors there's not any more skilled trades that can build these houses any faster and it bodes good or bad for the housing market depending how you look at it if you are in a house or can get in one quickly you'll be in good shape if you're not able to get into any kind of a house in the next year three four five years from now it's even going to be higher houses are going to be even harder to find harder to come by.
So whatever house you can get into even if it's not your ideal long-term dream home you're better off getting into that and riding that wave up of appreciation so that when it comes time to be in the place where you want to live permanently have that kind of house you want you've been able to benefit from that appreciation of whatever house you did get into and there's still deals out there if you look in the right place so that you're not locked out of the higher priced permanent house when that time comes.