Once the economy begins its rebound and jobs are once again more plentiful the need for housing will once again be in demand and when that occurs there could quite possibly be a housing shortage.
How, you may ask. As the economic recovery blossoms there will be a very large number of workers that will enter or re-enter the workforce and with that there is a good chance that there may not be enough housing to mange this new boom.
David Crowe, chief economist at the National Association of Home Builders says, "A housing deficiency isn't a sure thing, but the potential is certainly there." Basically there could be a large demand for new homes and apartments and builders won't be able to fulfill this need in a timely manner.
This type of shortage can happen when adult children move out on their own for the first time; roommates could go their separate ways and young couples wanting to start families.
Furthermore, shortages could also happen because builders could have a difficult time borrowing the funds needed to buy land, develop lots and construct new houses. David Crowe says, "Home buyers aren't the only ones who are facing stricter credit requirements."
Large public builders who usually dominate in the larger housing markets, construction financing may not be that big of a problem because most times the public builders go directly to Wall Street to get their funding. That is a far cry from small and mid-size local and regional builders because most of the time they have to go to local banks to get their funding and credit issues may occur.
Despite the fact that housing starts were up in April, those statistics don't truly show the entire picture. The more important marker is the number of permits that were applied for for new construction.
"Housing starts" are recorded when a builder begins construction and last April starts were very strong mainly because builders motivated buyers who eager to take advantage of the federal tax credits to buy their newly constructed homes by the June 30th deadline.
The shortage scenario also takes on even greater credence when you add the fact that the inventory of finished but unsold new houses are at their lowest levels since 1971.
Obviously there needs to be some inventory to take care of buyers who, for one reason or another, need to move immediately from being transferred, needing a larger home or they just wanted a new home that's never been lived in before.
Whatever the reason, there is a good chance that there could be a housing shortage in the near future and that is a double edged sword. On one side you have people who could be desperate for a place to live and on the other this shortage will most likely push up home values again. Only time will tell.