I have worked in this industry for many years. I have seen several ups and downs in the local housing market. One thing I see coming is a possible housing shortage here in Orange County. It has happened before. During the 1970’s, the real estate market slowed down, not so many homes were built and interest rates were high, so demand was low. During the 1980’s, we had a boom when demand rose and supply had to catch up. Then in the early 1990’s, we had a little bust when the local economy turned down, and we were over-supplied with homes once again. Builders stopped building. Then in the mid- to late-90’s, demand picked up and demand outstripped the current supply. Well, here we are again. Few new homes have been built, not just because builders have stopped building here, but because there is not much vacant land left in Orange County! I know that there is a lot of pent-up demand out there.
On the national level, there are two primary factors that will contribute to a home shortage in the not-too-distant future. The first of these factors is the size of Generation Y (those born between 1977 and 1994), which is estimated to be approximately 80 million, or 25 percent of the U.S. population. They are now entering their prime time for starting their careers, their families, and for buying a home.
The second variable is supply. There has been virtually no new construction, despite the predicted explosion in population growth. To illustrate the severity of this problem, the 2010 census put the U.S. population at approximately 309 million. By 2050, the prediction is that the U.S. population will be 439 million. That’s an increase of 130 million people in just 40 years. Regardless of whether they own or rent, they will still need housing.