A Shortage of Inventory and Leads
ply, and the volume for sale is flat at
234,000 homes — a 30-year low.
• At the end of the fourth quarter, 24
percent of all U.S. homes with a mortgage were worth less than the loan
balance. The housing vacancy rate in
the fourth quarter was 2.7 percent.
• The U.S. homeownership rate is
67.2 percent, down from its peak of
69.2 percent in fourth-quarter 2004
and decimated by record foreclosures.”
BOOMING POPULATIONS
CONTRIBUTE TO SHORTAGE
IN SOME AREAS
With the population in the United
States continuing to shift to areas with
temperate weather, positive economic
conditions and those that don’t have
issues with fresh water supplies, some
areas are seeing a boom in population
that no level of construction can meet.
Connor Hyde writes, “The Sugar
Land and Missouri City area experienced a record number of home sales
in 2014. However, population growth
in the area paired with various construction woes has led to a low home
inventory, causing a rise in home
prices and a dip in sales since January.
Since 2012 Sugar Land and Missouri
City real estate agents have classified
the area’s housing market as a seller’s
market due to the decreasing inventory of available homes and climbing
home costs.
As a result, many of Fort Bend
County’s master-planned communities are struggling to keep up with the
demand brought on by the influx in
population in the region.”
In fact, these changes to the market
have driven up the prices of the
homes that are currently on the market. Hyde quoted a local real estate
agent, Shad Bogany, who has seen
these changes first hand, “‘We have
more customers than we have houses
to sell, and we are getting multiple
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who want to continue to
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looking to alternative leads
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offers on houses,’ said
Shad Bogany, a real
estate agent with Better
Homes and Gardens
Real Estate in Sugar
Land and Missouri City.
‘We do not have a lot of
houses to sell, [and] we
have the builders, who
have been the biggest
pushers of home sales in Fort Bend
[County], behind in construction.’”
Issues with construction in population booming areas face a twopronged challenge – not enough qualified workers for residential projects
and not enough funding. Hyde writes,
“Home developers and cities are
competing with projects in the Greater
Houston area, such as the construction
of the new Exxon Mobil campus in
Spring and the continued construction
of the Grand Parkway. These major
projects have contributed to the lag in
home construction as there are fewer
skilled laborers available. ‘That is
exactly why we cannot keep up with
building homes fast enough,’ Reichert
said. ‘There are just not enough workers out there to build homes [and]
builders struggle on a daily basis to
find workers.’”
While all of the construction that
is being completed in booming areas
may seem like a good thing, there are
also ancillary issues. Hyde writes,
“The shortage in laborers and influx
of construction projects has also led
to an increase in the price of construction materials, which has directly
caused housing prices to increase,
Reichert said. Since 2011 material
costs have increased by 11.7 percent
and are expected to climb through
June 2016, according to the national
construction management company
Turner Construction Company’s price
index.”
Not only are homeowners faced
with fewer properties to choose from
and fewer new construction projects,
but the new construction they do find
may cost the average homeowner
PAGE 68 • 2016
more money than they can afford to
spend. With rising construction material costs, the associated increase in
new construction prices may prove to
be too much for homeowners.
These homeowners may end up
staying in their current home to avoid
the problem.
CHANGES IN SEASON
AFFECT INVENTORY
Another contributing factor to the
shortage in real estate inventory
is the upcoming change in season.
While spring markets generally show
expansion as more and more property
owners put their homes on the market,
the opposite it true during the fall and
winter months, especially in the cold
weather climates. Said Lawrence
Yun, “As winter approaches, inventory will slide further. Few homes
are newly listed after Thanksgiving.
Historically, inventory tends to be 15
percent lower in winter than summer.
Last year’s seasonal decline was
even more dramatic, at 25 percent.
We hope we won’t see an inventory
decline of that magnitude this winter.
Home values rising much faster than
income growth will markedly cut into
housing affordability.”
The contraction in the market will
pull many properties off of the market
with buyers still looking to purchase
homes. Being able to find a property
during any time of the year is becoming a significant challenge for buyers
who want to have several homes they
can investigate.
Continued on pg. 95
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