Housing Inventory Shortage Solutions

Nef Cortez

By Nef Cortez

The Housing Inventory Shortage is becoming a bigger problem in many ways.  Economics 101 taught us that the change in either side of the Supply-Demand equation will create a change in outcomes to the marketplace. In this case, the Housing inventory is the supply, and being an illiquid investment, it does not change very fast.  It is fixed and immovable, and therefore more constant than the Demand side.  Major factors that have contributed to the low level of “Supply” growth need to be addressed for the long-term stability of the housing market. If the low levels of new home construction are not encouraged or allowed to grow, we will eventually suffer from an unbalanced, constricted real estate market.  Legislation at the state and local levels needs to become more “builder-friendly”, to allow more units to be built annually. The legislation, policies, and planning has to become more streamlined and less expensive to the developer in order to allow for a more balanced real estate market.  Part of the change has to be in the form of less restrictive zoning regulations.  It doesn’t benefit our communities when only a few can afford to buy and own a home.

The Demand side of the equation is driven more by population growth, and the populace’s desire and ability to purchase a home. The low interest rate environment continues to fuel the demand, as it has continued to keep the homeownership demand at a steadily increasing level. As long as the interest rates stay relatively low, we will continue to see the steady demand that has driven the 7 % annual median sales price increase of homes in Southern California. The positive outlook for the local real estate market was presented to us by Dr John Husing at the Real Estate Research Council of Southern California’s Quarterly Luncheon at Cal Poly Pomona. The improved economy, with employment continuing to grow, and the low interest rate environment is projected to remain steady for the next year.

This article was written by Nef Cortez, a licensed Real Estate Broker, Ca BRE # 00560181 since 1976. He can be reached via e-mail at nefcortez@gmail.com.  Please feel free to email any questions regarding real estate.