Why Is The Demand For New Housing Higher Than Supply?

As the American population ages, so too does its housing stock. After more than 30 years of steadily rising house prices, the state of housing in the United States has shifted from limited demand to mass and accelerating demand. This shift is due to many factors, but it is most certainly driven by the aging of the population.

The United States is home to a wide array of individuals from all walks of life. The fact that each and every one of them is affected by the same aging phenomenon means that there is a huge opportunity for those with capital to access the market.

Fortunately, government aids are available in the form of commercial loans. Private investors will also be able to tap into these resources with the advent of the internet. With such limited competition, there is a huge potential for investors to enter the market.

Factors in demand

There are a number of causes for the increasing demand for housing. At one end of the spectrum are the economic challenges that the United States is currently facing.

In addition to slowing growth, the government is in need of a large number of new workers. As these workers are no longer being offered employment by private employers, there is a good chance that some or all of them will need to relocate to find suitable employment. A shortage of housing in the United States would have a negative impact on the construction sector as well.

With a large number of baby boomers moving towards retirement, there will be a shortage of housing opportunities for the same age group in the coming years. This can have a very negative impact on rental rates. The challenges that exist in the national economy could negatively impact the property values of older people and their ability to make use of the property they own.

The economy as a Factor

Of course, demand for real estate is not just determined by the economy. There are cultural and social factors as well. Couple this with the requirement to move into larger properties that cannot be afforded by many today, and we begin to see that demand for housing is very high indeed.

One area where supply exceeds demand is in the housing sector. There are simply not enough homes for sale to satisfy the number of people wanting to move into bigger residences. The number of residents in the United States who are elderly is expected to exceed the number of senior citizens who are in a position to occupy their own homes. This means that demand for new homes in the United States is now higher than the supply.

There are currently two ways in which the government could help alleviate the housing crisis. First, there are existing programs in place that provide grants to individuals that are having a hard time qualifying for other types of loans. Second, the government could simply invest in new projects, such as schools, that would allow for more housing construction and allow for the completion of new projects at a faster rate.

Funding the only solution?

Without new funding, these programs are simply not going to be viable. Even if the government were to borrow additional funds, the rate of interest for these loans is far too high to be of any benefit to the average citizen. As a result, the United States is likely to experience a continued increase in foreclosures, meaning that more people will need to rely on the local housing assistance to keep them from falling into foreclosure.

For the average homeowner, it makes sense to try and take advantage of the current financial woes. By investing in new properties, refinancing existing loans, or refinance existing mortgages, homeowners can get rid of their houses and save money while paying down debt. Given the amount of national debt, this move could bring about a reduction in the deficit.

In the long run, the federal government should consider providing more government funding for the development of housing projects as a long-term, or even short-term solution to the problem. This investment in public infrastructure can prove beneficial to the country as a whole, and in the long run, it will be a boon to the housing market.