This week, we’re getting numbers in from the month of April with regards to housing and it’s not good news. In April, housing starts are down 30% from last year. This is tough, as we were already experiencing a housing shortage before the pandemic caused unprecedented unemployment and what most are now calling a recession. We don’t like that word very much, but there’s no hiding the facts.
I refer back to the “Great Recession” of 2008 as a comparative to today’s real estate crisis. There are key differences, to be sure, and I’ve shared some of those of the past weeks in this blog and on my radio show, The Mortgage Voice.
Look, we have never fully recovered from the 2008 housing crisis altogether, especially in terms of numbers of houses being built. You may recall that prior to the “Great Recession” there was a housing boom. Plenty of inventory, and lots of options once the banking world got straightened out. But not before the market corrected itself, or adjusted itself if you prefer, from the bust. We’ve not ever returned to the building boom pre-2008, though, in the past 12 years, nowhere near.
We’re roughly 300,000 houses short right now, and the inventory supply will likely help keep prices in check, and your investment, even with the pandemic, but we can’t really be sure of the offset down the road. These is a shortage, and it is exacerbated by the pandemic, and scarcity of qualified buyers.
Another “essential” business is feeling the pinch of slow housing starts, the building supply chain, all along the chain, there are lots of people dependent on housing starts, which have been interrupted. Everyone has heard the story about the meat packing closures, because of the pandemic, which caused an issue in the supply chain. But it’s important to remember that everyone from lumber mills to construction workers and various tradespeople that new home building requires, have been heavily affected by the pandemic and the downturn in housing starts.
Here’s hoping the economy gets re-started soon and the investments we’ve all made into our homes continue to provide for us in the future.