The economics of real estate is both simple and complex. As with any other product, supply and demand drive costs in the housing market, and right now house costs are at an all time high – an 18% increase since September 2020. But the factors creating record stocks and increased buying interest is varied and complicated.
To illustrate how asymmetric the market is, we can look at the months of supply measurement. This metric tells us how many months it would take for all homes on the market to sell at the current rate. In a balanced real estate market, that number is six. Since 2019, the average number of months of supply has fallen from around four to less than two. The number of single-family homes for sale in the United States at the start of 2021 was only 870,000, the lowest in about 40 years, according to a 2021 study from Harvard University.
Investment firms found themselves on the positive side of the pandemic housing crisis, accounting for one in six homes and 25% of all apartments purchased in the second quarter of 2021. Investors were able to take advantage of the low interest rate rental prices and demand, especially among those with non-market prices.
Although the pandemic has played an important role in stimulating demand for housing, it is only partially responsible for the shortage of supply. This problem – which is actually an underproduction problem – began two decades before the world ever heard of COVID-19.
According to the National Association of Realtors (NAR), the United States built 276,000 fewer homes per year, on average, between 2001 and 2020, compared to the previous 30 years. If the rate of production had not slowed down over the past 20 years, there would have been 5.5 million additional households. The NAR estimates that the United States would need to build more than 2 million new units per year over the next decade to close the gap. Under the best of circumstances, this rate would be difficult to achieve. In the current circumstances, where supply chain disruptions affect 88% of construction projects and almost 90% of construction companies cannot find enough skilled craftsmen to meet demand, this seems like a task. of Sisyphus.
The real estate market is nuanced from state to state, and while many national trends hold true at a more localized level, it’s important to understand the context of your individual state.
To analyze each state’s real estate market, the ZeroDown Purchase Option rental platform compiled current and historical data from the US Census Bureau and the Department of Housing and Urban Development. The data will cover homeownership rates, vacant homes, foreclosures, mortgages, new home construction and manufacturing, as well as housing characteristics such as median age, square footage and number. of parts for houses in your state.
Tennessee in numbers
– Home ownership rate: 67.1%
– Owner vacancy rate: 0.7%
– Rental vacancy rate: 8.4%
– Occupied dwellings: 2,654,737
– Owner-occupied housing: 1,765,720, tenant-occupied housing: 889,017
– Year of construction of houses: 2014 or later (6.3%), 2010 to 2013 (3.3%), 2000 to 2009 (16.1%), 1980 to 1999 (31.8%), 1960 to 1979 (24.9%), 1940 to 1959 (12.3%), 1939 or before (5.3%)
– Number of bedrooms: no bedroom (1.3%), 1 bedroom (7.3%), 2 or 3 bedrooms (70.5%), 4 or more bedrooms (21.0%)
– Type of heating used: utility gas (31.3%), cylinder, tank or LPG (3.7%), electricity (62.5%), fuel oil, kerosene, etc. (0.3%), coal or coke (0.0%), all other fuels (1.7%), no fuel used (0.3%)
– New building permits: 49,719 (value of $ 9,207,252)
– Prefabricated homes shipped to the State: 2,353 (average selling price: $ 86,000)
The COVID-19 pandemic has created a world where some people have found the financial flexibility to buy a home and the incentive to do so quickly. Remote working, closings and record mortgage rates have caused people – especially those under 35 – who might have delayed buying a home to suddenly seek more space for themselves. , their families, and a yard for their pandemic puppies in cheaper neighborhoods far from employment hubs and major subways.
For others, the pandemic has created a new reality of financial insecurity, overdue mortgage or rent payments, risk of eviction and prices outside previously affordable neighborhoods. Almost a quarter of households earning less than $ 25,000 a year were behind on mortgage payments at the start of 2021. During the same period, a fifth of all renters in the United States were behind on their payments. monthly. In these aggregate numbers, the burden of economic fallout from the pandemic is disproportionately on low-income and minority families.
Read on to find out how the real estate market is doing for neighbors in your state.
Alabama in numbers
– Home ownership rate: 73.3%
– Owner vacancy rate: 0.7%
– Rental vacancy rate: 12.5%
– Occupied dwellings: 1,897,576
– Owner-occupied housing: 1,305,223, tenant-occupied housing: 592,353
– Year of construction of houses: 2014 or later (4.9%), 2010 to 2013 (3.7%), 2000 to 2009 (15.3%), 1980 to 1999 (33.2%), 1960 to 1979 (27.1%), 1940 to 1959 (11.4%), 1939 or before (4.5%)
– Number of bedrooms: no bedroom (1.1%), 1 bedroom (6.1%), 2 or 3 bedrooms (70.3%), 4 or more bedrooms (22.5%)
– Type of heating used: utility gas (26.5%), bottle, tank or LPG (5.6%), electricity (66.4%), fuel oil, kerosene, etc. (0.1%), coal or coke (0.0%), all other fuels (0.9%), no fuel used (0.4%)
– New building permits: 19,982 (value of $ 4,358,692)
– Prefabricated homes shipped to the State: 3,368 (average selling price: $ 80,000)
Arkansas in numbers
– Home ownership rate: 66.9%
– Owner vacancy rate: 1.2%
– Rental vacancy rate: 8.9%
– Occupied dwellings: 1,163,647
– Owner-occupied housing: 761,809, tenant-occupied housing: 401,838
– Year of construction of houses: 2014 or later (5.5%), 2010 to 2013 (4.2%), 2000 to 2009 (16.3%), 1980 to 1999 (32.7%), 1960 to 1979 (27.1%), 1940 to 1959 (9.9%, 1939 or before (4.2%)
– Number of bedrooms: no bedroom (1.7%), 1 bedroom (7.1%), 2 or 3 bedrooms (74.8%), 4 or more bedrooms (16.4%)
– Type of heating used: utility gas (38.7%), cylinder, tank or LPG (6.7%), electricity (50.6%), fuel oil, kerosene, etc. (0.1%), coal or coke (0.0%), all other fuels (3.7%), no fuel used (0.3%)
– New building permits: 12,493 (value of $ 2,353,746)
– Prefabricated homes shipped to the State: 1,362 (average selling price: $ 82,100)
This story originally appeared on ZeroDown
and was produced and distributed in partnership with Stacker Studio.
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