Tuesday, 18 July 2017 00:17

Will Housing Shortage Become an Increasing Recovery Factor?

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With labor force participation and the active unemployment rates reflecting positive levels not seen since the 2008 outburst of the great financial recession (2008-11), tens of thousands of “post-millennials” are moving out of family homes, which they had to share with their parents during the unemployment blight.

Whereas finding a “home of their own” was a primary objective of college graduates, as well as others “coming of age,” the financial depression necessitated the need for the intense home construction growth of the second half of the twentieth century, and the early years thereafter.

While “rentals” took some of the pressure off the majority of younger people in the process of family formation, the dearth of new home construction became a multi-year factor, despite an active U.S. population growth. While new construction of single family homes had reached levels as high as 1.6 million per annum prior to the “financial disaster,” recovery levels currently are struggling to meet the one-million mark yearly.

But as President Trump’s primary objective of intensified U.S.-based manufacturing production has begun to manifest itself, the shortage of single family homes in all parts of the nation, and additional rentals in the big cities, is looming ever larger.

Despite the fact that mortgage interest rates are creeping up, the higher anticipated employment levels, and commensurate wages, will generate an increasingly higher level of housing demand. Additionally, the long overdue nationwide trillion dollar infrastructure anticipation will put intense pressure on the available “crafts” capability of tens of thousands that had drifted into other fields of endeavor; making plumbers, mechanics, plasterers, latherers, contractors, etc. even more unavailable.

Despite the huge number of unemployed, numbered in the tens of millions that had to ride out the past decade of job shortage, or non-existence, many of these are now at retirement age, and not prepared to go back to work. This means that the upsurge of rentals in the big cities, and the cost of new homes throughout the nation will likely reach new high levels.

It is safely predictable that a year from now, unemployment, low-price housing, and reasonable rentals will be replaced by just the opposites in each case. With “Made in America” will come substantially higher prices, unfilled job openings, and increasing residential shortages, together with an overall prosperity not seen in the U.S. since the post World War II era.

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Morrie Beschloss

Morris R. Beschloss is a global economic analyst, award-winning long-term top business executive, and avid blogger.

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