The current number of homes under construction exceeds the number at any point in the last five decades; this seems promising amid a housing shortage.
However, building fits and starts erode the building boom's otherwise positive effect on the housing shortage. Many construction projects rest in limbo; contractors can't finish them and homebuyers can't occupy them. These nearly completed homes still need details like windows, garage doors, and fixtures. Such homes sit in the "under construction" category. Banks won't allow homebuyers to move in, even if their homes only need a garage door. Builders blame supply-chain issues for causing material shortages.
According to an article reprint from NerdWallet on the MarketWatch site, the solution to material shortages will come in a trickle, not a flood. "It's not like a ship will dock in Long Beach, unload every door on backorder nationwide in one afternoon, and resolve that shortage instantly. Moreover, even if such a shipment were to arrive, there's a finite supply of trucks to deliver the cargo and a limited number of skilled workers to hang the doors."
"We are always telling our buyers, please be patient; we're going to get you there," Michael Nunziata, division president of 13th Floor Homes, says. "We want them to move into the house and be extraordinarily happy with the product that we have delivered," even if that involves delays.
Economists see delaying higher interest rates as the only remaining threat to the home shortage. Bidding wars, extremely short days on the market, removing contingencies, and homes selling far above the asking price will decline as the market cools. And the market can only cool as interest rates increase, says MarketWatch. The average 30-year fixed-rate mortgage rose almost 2% from the beginning of the year to mid-April, cresting at just over 5%. As a result, higher rates will knock some buyers out of the market.
Many cite material shortages as the leading reason for the current housing shortage. However, MarketWatch opines that the present low-interest rates are also contributing to the prime bottleneck. Interest rates have climbed a couple of points in a couple of months. Are you willing to pay more or wait for materials to trickle in?
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