5 Reasons the Housing Shortage Can Affect Your Home-Buying Capabilities

The American economy is recovering from the COVID-19 pandemic, so many industries are booming, especially the housing market. Unfortunately, there is currently a housing shortage across America, making things challenging for buyers. As a potential homeowner, it’s essential to understand how the housing shortage can impact your home-buying capabilities. Here are some reasons housing shortages affect your ability to purchase a home and how you can work around them.

The Current Housing Shortage in the U.S.

It’s estimated that more than five million homes are needed to meet current demand in the United States. This number is even higher when considering the population growth that has occurred since the COVID-19 pandemic began. The housing shortage is due to a combination of factors, including but not limited to:

  • decrease in home construction due to labour and material shortages caused by the pandemic.
  • Higher demand from buyers due to historically low-interest rates.
  • The prevalence of cash offers by investors.

How the Housing Shortage Impacts Buyers

With supply far lower than demand, many potential homebuyers are bidding wars with multiple other buyers for the same property. Here’s a look into how it can affect your home-buying capabilities this year:

Increased Demand and Limited Supply

One of the biggest challenges facing homebuyers is the limited supply of homes. Due to the increased demand for homes in recent years, the housing supply hasn’t been able to keep up. This has resulted in a shortage of housing stock, making it difficult for buyers to find what they’re looking for.

Skyrocketing Prices

When the demand for homes is high, so are the prices. The unique combination of low-interest rates and housing shortages has skyrocketed housing prices. This means that buyers could end up paying more than they originally intended.

Tough Competition

When housing demand outstrips supply, it results in increased competition. Buyers are now finding themselves in bidding wars, and unfortunately, many are losing out to other potential buyers willing to pay more for the same property.

Multiple Offers

Multiple offers on a single property are becoming increasingly common, making it particularly difficult for first-time homebuyers. If you’re looking to buy a home in a hot market, there’s a good chance you’ll compete with multiple offers. In these situations, buyers can feel demotivated when their offer is rejected.

Reduced Availability of Mortgages

Finally, the housing shortage has also led to a reduction in the availability of mortgages. Banks and lenders are becoming increasingly cautious about lending on overpriced properties and may not see good returns. As a result, securing a mortgage is now more complex than ever, adding to the stress of the already troubled home-buying process.

How to Get Ahead of The Competition

Despite the increased competition and limited availability of homes, there are still ways to get ahead of the housing shortage. Here are a few tips to help you find your dream home:

Get Pre-Approved

Buying a home requires finances, and being ahead of the competition means getting pre-approved. It gives you various benefits. First, you can identify the price range in which you should be looking for a home. Second, it helps you better understand what you can afford, and finally, pre-approval letters prove that the bank or lender backs your offer. Contact your local home loans officer and check your credit score for pre-approval. They can then review your financial details and provide you with the necessary documentation to get started.

Focus on Outlying Areas

The housing shortage is mainly concentrated in cities and metropolitan areas, so focusing your search outside these locations can work to your advantage. If you’re willing to look further from the city center, you may find better deals or even have more negotiating power.

Be Flexible with Your Search

The housing shortage has made it more difficult to find your dream home, so you may need to be flexible in your search. When finding a property, look for alternatives that meet your needs and preferences. Consider other factors, such as the size or location of the property, before making any decisions.

Work With Professionals

Finally, enlisting the help of professionals can also work in your favour. A real estate agent or a mortgage broker will have access to resources and knowledge that are otherwise unavailable to buyers. They’ll know where to look for properties that fit your criteria and may even be able to negotiate better terms on your behalf.

While the housing shortage has made it difficult for buyers to find their dream homes, there are still ways to make the process easier. By making proactive choices, being flexible with your search parameters, and working with professionals, you can get ahead of the competition and secure your dream home.

Isa Lillo


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