Why We Don’t Have Enough Inventory

Dated: February 25 2022

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Explaining why the housing crisis happened in the first place.

Today we want to talk about the housing crisis. Every month, even every week, we see prices shooting up. Why is this happening? People talk about the low interest rate, the low inventory, all the money the federal government has pumped into the market, and inflation, but that’s not all. There’s another factor that a lot of people overlook: new construction. 


Every decade, builders make about 25 million homes throughout the U.S. That number went down after the 2008 crisis. Between 2008 and 2018, only about 5.5 million homes were built. One-fifth of the average new homes were built, and because of that, we have a big housing crisis. 

The low interest rates and the money pumped into the market fueled the crisis and helped prices go up. The Californian government came up with a few ways to help solve this crisis, like SB-9 and SB-10. However, it’s going to be a slow process.


If everything remains the same till summer, prices will continue to go up.

On top of that, the construction cost per square foot has gone from around $150 to around $300 because of inflation. A lot of people have realized that they’re buying a 1,500 square feet house already at $1,000 per square foot. If they add another thousand square feet, they’re only paying $300 per. They can basically triple their money that way, so a lot of people are looking outside the box to see whether it makes sense to buy a property or not.

 

With the way the economy is, we won't slow down by summer. This has been our second year where not even winter and the holidays have been able to slow prices. If everything remains the same till summer, prices will continue to increase.

 

I always tell my clients to look at themselves, not the market. If you can afford a house, go ahead and buy it. It can be really stressful to buy, but we are fortunate enough to still find houses and help our clients. If you have any questions about this or real estate in general, give us a call. We’ve been in the business for 16 years, and we take pride in what we do.

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Rahul Bhagat

We understand that buying or selling real estate is more than just a transaction: it's a life-changing experience. That's why our team of highly seasoned real estate professionals are dedicated to pro....

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