America’s Housing Shortage Will Not Be Fixed Before 2030

By: Get News
James is a leading residential real estate expert located in Southeast Michigan; his team specializes in new and existing residential construction sales.

With 15+ years of residential real estate sales and remodeling experience, James, like many in the industry, saw the housing crisis of 2008 come and go, diligently noting the factors that led to it and the long-term impact left in its wake.

Speculations about the next market crash are widespread; many emphasize that rapid price increases make it unsustainable, while others point out that the event typically occurs every decade and we are currently past due. James encourages his clients to trust the hard, historical data and rely on concrete facts when making predictions of this kind. 

He points out that the key fundamentals that caused the last real estate crash were variable interest rates and absurd lending practices, stating:

“Anyone with a pulse could buy five homes then. If you were breathing, you could buy multiple homes without income verification and speculate that they would keep going up in value. Variable interest rates were in place on the majority of these loans, which could jump up and force people to default on those home loans.”

Danley points out that the last real estate market crash circumstances are not currently present, emphasizing that the exact opposite is taking place. In summary, stating that most homebuyers today go through extensive credit and income screening and are purchasing with long term fixed interest rates. The current pieces influencing today’s inventory problems are the lack of new construction inventory, millennial purchasing power and the Covid-19 pandemic.

“Over a decade ago experts thought Millennials would never buy homes or move into the suburbs. Well, now they have and are buying homes in mass and they want small suburban downtowns that are walkable. 37% of the homes purchased in the last year were bought by millennials. [National Association of Realtors] The challenge is that millennials don’t have time to hire and manage contractors to do renovations themselves, nor do they want to wait 12–18 months for a project to be completed. They would rather pay more and move in now. As a result, properties that are newly built/recently renovated and “move in ready” have massive bidding wars,” according to Danley. 

He adds that, “since 2008, very few people have gone into building trades. Everyone has been pushed toward college and higher education; builders stopped aggressively building homes post 2008 and stopped adding spec home inventory to the marketplace. This has led to such a drastic housing shortage that even if builders ramp up to pre-crash construction levels (which we are currently extremely far below), it would take almost a decade to catch up to create enough supply to meet demand.” 

Furthermore, James claims “in order to shrink the supply deficit, builders would need to exceed the long-term historical average pace of 1.5 million units a year, [see NAR report cited above]. At 2.1 million units a year, near the level reached in 2005, it would take a decade to close a gap of 5.5 million units [see The Wall Street Journal].”

“The global pandemic has caused a shift in the modern work environment as almost everyone was forced to work from home. This has led companies to realize it truly increases productivity and drastically reduces physical overhead. It’s a trend that isn’t going away and is pushing everyone to upgrade housing to have more room for multiple offices,” says Danley.

James emphasizes that his team will continue to monitor the ever-changing market and share valuable insight with its clients regarding the fundamental factors that affect supply and demand “so that we are prepared for wherever the market takes us.”

Danley was featured in Hour Detroit: Faces of Detroit 2021, receiving this accolade for exemplary work in the field of residential real estate. His team continues to provide quality service to Michigan residents and continues to prove their position as the top 1% of Michigan Realtors in annual sales revenue, closing 2021 with $34 Million+ sold. 

More information about James Danley & Associates is available on the company’s official website

Media Contact
Company Name: James Danley & Associates
Contact Person: James Danley
Email: Send Email
Phone: 734-308-0109
Country: United States

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