Housing Market Update- Housing Shortage Coming?  Really?

Capstone Homes builds new homes in Delaware. BY SCOTT DAILEY
April 23, 2011

Capstone Homes has an interesting take on the housing market.  Capstone Homes is one of the larger local builders in the Delaware Beach Homes market- building homes in communities like Holland Mills, Cannery Village, and Delaware new homes on your lot.

It's no secret that the new home sales market is facing the worst business environment since records have been kept.  In the last few months, the annual rate of new home sales have been the lowest on record- going back to the early 1960's.

Let me give you an idea of how bad that national statistics truly are:

Annual New Home Sales in the US in 1963: 560,000

Annual New Homes Sales in the US in 2010: 323,000

US Population in 1963: 190,000,000 (rounded)

US Population in 2010: 308,000,000 (rounded)

What that means is that in 1963 (the year JFK was killed), there was one new home sold for every 339 people.

In 2010, there was one new home sold for every 954 people.  That's a huge difference.

The long and the short of it is this:

If the economy turns around, we could be facing a shortage of new homes across the country.  No, I'm not kidding.

In a recent article posted on Shawn Tully states:


Today Castleman is witnessing an extraordinary reversal of the new-home glut that helped sink prices just a few years ago. In the 41 cities Metrostudy covers, a total of 78,000 houses are now either vacant and for sale, or under construction. That's less than one-fourth of the 343,000 units in those two categories at the peak of the frenzy in mid-2006, and well below the level of a decade ago. "If we had anything like normal levels of buying, those houses would sell in 2½ months," says Castleman. "We'd see an incredible shortage. And that's where we're heading."

The bottom line is that demand is unbelievably low right now, but so is supply (both based on historical averages).  If demand returns- there will be serious supply problems.  Believe it or not, we could have a new home shortage in the near future.

So the big question is this:  When will the demand return?  Well, I think it's this simple: Jobs.  Jobs will lead to household formation- which will lead to a demand for Delaware new homes.  There isn't a single other economic statistic that you need to watch- housing will recover quickly when jobs recover.  That's all you need to know about the housing market.

To read the entire Forbes post, click HERE.