Housing Shortage Persist — Property Improvement Enterprises

The past few years have brought many challenges upon us, among them, an unsettling shortage of houses as a consequence of a long decade of underbuilding. As of 2020, America is estimated to have a shortage of about 5 million to 6 million homes (Hoff, 2020). During the past decade, 12.3 new million households were created in the U.S., but only 7 million single-family houses were constructed (Lerner, 2021). On a more local scope, Maryland and Virginia are among the top 13 states with the most severe housing shortages in the country (Nechayev, 2021).

To better understand the state of the housing market, let's take a closer look at what has been going on. To begin, houses are flying off the market faster than hot cakes. Over 30% of houses in October 2021 went under contract just one week after being listed (Lerner, 2021). Amazingly, sales of new homes increased by a significant 50%, and existing homes by 38% in just the past year (Dangor, 2021). Since the supply of houses has not been able to keep up with this aggressive demand, the number of homes for sale decreased by a staggering 30% during the same timeframe (Dangor, 2021). This substantial demand for housing has caused the prices of residential properties to shoot up by approximately 20% from 2020 to 2021(Dangor, 2021).

We can clearly see that there is a problem with the market, but what caused this issue to begin with? Well, it actually goes back to the Great Recession the United States experienced from 2007 to 2009. Housing starts have not returned to the level they were at before 2007, meaning that construction has been behind growing demand ever since (Hoff, 2020). Two major factors affecting the construction industry are the lack of labor and the scarcity of materials. Construction firms today are in need of more than 2 million workers (Dean & Schlitz, 2021). Simultaneously, more than 90% of builders reported shortages of all kinds of materials last year (NAHB, 2021).

Although the current state of the housing market may be daunting, there does seem to be a light at the end of the tunnel. The first positive sign we are slowly returning to normality is that there has been a steady rise in builder confidence and housing starts (Hoff, 2020). Another promising sign is that bidding wars are decreasing. For example, in the D.C. metro area, competition between buyers fell by around 10% from 2020 to 2021 (Lerner, 2021).

At Property Improvement Enterprises, we are working hard to be part of the great effort Americans are putting towards overcoming these exceptionally difficult times, one house at a time. As a construction company, we are determined to persevere through the challenges of the current housing shortage to provide homes where people can feel safe and make memories. We have five homes coming to market in the next quarter. Join us in our mission!