One of the main drivers of rising home prices is the lack of supply of existing homes and new homes. And homebuilders aren’t able to build fast enough to meet demand right now.
One of the big issues here is the supply chain.
“Builders have a lot of homes under construction,” said Jeff Tucker, senior economist at Zillow. “You know, what builders need is for all the materials to be delivered. They need appliances, they need garage doors.
Before they can even get there, they need raw materials. “Wood and concrete and bricks and roofing materials, etc.,” said Jim Gaines, a research economist at Texas A&M University.
“The cost of all of this has gone up, and also just the availability – it’s just not as available.”
In addition, there is the labor shortage. There are not enough carpenters, electricians or truck drivers to meet the demand.
There is also the land problem. It does exist, but due to zoning rules and other regulations, it can be difficult to start building. The paperwork takes forever.
“Local municipalities and even counties over the past few years have had to cut staff and haven’t added staff to just get the job done,” Gaines said. “And some of the people who are being hired to re-staff, those areas are not as experienced.”
But where does this demand come from? People want new homes, but what about the ones they currently live in? Are there a bunch of places left empty? The answer is no.
Turns out it’s the millennials’ fault again. Many of us were born around the 1990s. We no longer want to live with our parents or with roommates. And we finally saved enough money to buy a house.
“So there’s just an unusually huge wave of people going through this life transition,” Tucker said.
And the only thing that’s going to slow that demand down – and we’ve started to see the beginnings of that – is when prices go too high.
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