As the 2021 real estate boom continues with bidding wars and record-selling prices, it’s common to wonder how we got to this point. The pandemic and lockdown forced us to accept personal changes that we weren’t expecting. Though hardships were plenty, many people came to realize that not all of the changes were negative. Working and learning from home helped us to find balance in our lives, and some began seeking new homes that were better equipped to help us embrace this new lifestyle. Others sought new homes to accommodate growing families.
For-sale signs started popping up here and there. People were eager to find their dream home, only to be disappointed when offers were rejected. Houses were frequently sold within hours of listing, and disillusioned buyers couldn’t seem to catch a break!
But there’s much more to the story. The upheaval of the past year has shed light on a problem that’s been brewing for years. The housing crash of 2008-09 had a tremendous impact on the construction industry, resulting in a significant reduction in new home construction. This trend has continued for more than a decade, creating an inventory shortage of hundreds of thousands of units per year. By 2020, this resulted in an estimated shortage of 3.8 million houses, according to Freddie Mac.
While the real estate market will eventually level off, it may take longer for the construction industry to catch up with demand. In the meantime, buyers can work closely with their agents to help them understand and navigate these obstacles.