If you’ve been listening to the news or have actually tried to buy a house since 2020, you’ve probably already noticed the housing shortage and its contribution to the soaring cost of homes. While it would be easy to blame causes of the housing shortage to just one or two variables, in reality, there are many combining factors that have caused and then further escalated the lack of homes for sale in the Roanoke, Virginia area and all across America. This has created a market that is both on fire and unattainable, especially on your own.
The Major Factors Making It Difficult To Buy Property in the Roanoke Valley and Surrounding Areas
After the great recession in 2008, far fewer new homes have been built than in any other time – especially for entry-level homes (less than 1,400 Square Feet). Construction of homes of this size has steadily decreased since the 80s, but then experienced a sharper decline after the 2008 recession. In 2020, only 10% of the homes built under 1,400 square feet was much closer to 10% — a 50-year low.
Also, between January 2012 and June 2021, 12.3 million American households were formed, according to the U.S. Census. During 2013 and 2021, only about 7 million new single-family homes were built, creating a shortage of about 5 million homes.
Much of the reasoning for this is when the COVID-19 pandemic hit in 2020, much of the world effectively shut down, halting production and deliveries, and creating supply chain issues that persist today. These shutdowns led to shortages of building materials and caused prices to rise. From August of 2021, building material prices had risen almost 19.4% during the year compared to a more normal 1.1% increase in the same period in the previous year. Wages are also rising for construction workers which also propels raising home prices.
Wages for construction workers are also rising, as there is a labor shortage in the building industry. Those costs are typically passed onto the consumer.
Baby boomers, on the other hand, are deciding to “age in place,” staying in their homes as they age rather than selling and downsizing or moving. This trend was only exacerbated by the COVID-19 pandemic, which created concern and caution surrounding living in nursing homes. Selling a house typically means buying a house to replace it. With prices soaring, some would-be sellers are waiting to sell because they’re not sure if they’d be able to find an affordable home to replace their current home.
“75% of agents believe the inventory shortage will persist into late 2022, and 52% believe that even just a little more inventory would give buyers more options.“ “In 2022, 83% of agents predict a seller’s market compared with 13% who predict a balanced market and just 2% who expect the market to shift to a buyer’s market.“ (Source: Homelight’s Top Agent Insights 2022 Housing Market Preview.)
The Good News
Many agents think the end of mortgage forbearance plans will result in new listings. Redfin has just reported that the supply of affordable homes rose 13% from 2021 as homeowners of low-cost homes whose mortgage was in forbearance decide to sell their homes.
The buyers market is now showing life of some balance as more listings seem to be appearing recently in the Roanoke Valley areas than in the last six months. We expect this trend to continue into 2023. So if you are waiting to buy that house, things are starting to look up for you!
How To Get Help Buying A Home In Roanoke
The real estate market, especially in today’s market, can be extremely difficult and literally heartbreaking on your own, but working with a great agent from Red Key Realty of Roanoke, Virginia can greatly reduce much of the stress associated with buying and selling a home in Roanoke and the surrounding areas. Allow us to help you find the best home in your budget — and submit a winning offer. This is what we do everyday at Red Key Realty.
(Article sources data and information from: https://www.homelight.com/blog/buyer-why-is-there-a-housing-shortage)
