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Harvard Report predicts housing shortage likely coming


According to Harvard University’s Joint Center for Housing Studies’ 2011 annual report, “State of the Nation’s Housing”, 16 million new housing units will be needed to meet population growth and demands within the next ten years. From 2007-2010, household growth averaged about 500,000 per year – less than half the 1.2 million annual pace averaged prior from 2000-2007. The report predicts a need for 1 million new homes a year to meet population growth in the coming decade. To absorb the current rate of foreclosed and distressed homes around the country, household formation needs to begin to develop at a more normal rate, according to the report. The trouble is that household growth has partially stalled since young adults have delayed buying homes and immigration has slowed down. As a result, builders have drastically cut production of new homes in recent years. “With inventories of new homes at historic lows, a turnaround in demand could quickly result in tighter markets,” the report notes. “Over the longer term [however], the number of younger households is set to rise sharply, supporting growth in the population that fuels growth in both new renters and first-time buyers. The path of the economy and evolution of the mortgage market will determine when and if this increased demand materializes.” Click here to read the report.

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