A strange phenomenon is making the 'new housing crisis' even worse
There aren't enough homes in America.
The supply of houses simply can't keep up with the booming demand, and as we've noted, this is driving up prices and keeping first-time homebuyers out of the market.
There are numerous reasons for the shortage — credit conditions, the rising costs for homebuilders, a construction labor shortage — but Matthew Pointon at Capital Economics pointed out another, bizarre reason that this new housing crisis is unfolding.
People are leaving a lot of homes sitting empty.
"There are also a large number of vacant homes being held off the market for reasons other than occasional use," Pointon wrote in a note to clients Wednesday.
The number is a measure of houses sitting vacant for reasons other than being a vacation home or occasional rental. While the percentage as an amount of total stock had been creeping up before the financial crisis, it jumped in the aftermath of the crisis and has stayed elevated since 2010, as can be seen in Capital Economics' chart.
Instead of being a part of the supply of housing for buyers, these homes are sitting empty, unavailable to the buyers who are scrambling to find a house to buy.
Pointon is optimistic for these homes, saying they can't just sit there empty forever, but adds that it won't solve the whole crisis. Here's his assessment: "We expect those will slowly trickle back onto the market, helped by higher house prices. That said, we don’t see much prospect of a significant rise in the existing inventory any time soon. Tight credit conditions will prevent some from moving, while low returns on other assets and elevated house price expectations will encourage some of those who do move to keep hold of their previous property." So in addition to the myriad of other issues facing new homebuyers, they have to contend with owners hoarding vacant houses. Read » | | | |
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