The US housing market is short 6.5 million homes | CNN Business (2024)

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The US housing market is short 6.5 million homes | CNN Business? ›

As a result, there is a sizable shortage of new homes after more than a decade of under-building relative to population growth, according to a new analysis from Realtor.com released Wednesday. The gap between single-family home constructions and household formations grew to 6.5 million homes between 2012 and 2022.

According to data reported by the PEW Trust and originally gathered by CoreLogic, as of 2022, investment companies own about one fourth of all single-family homes. Last year, investor purchases accounted for 22% of American homes sold. This is significantly down from the 80% number in 2020-2021, why is this?

The National Low Income Housing Coalition says the U.S. has a shortage of 7.3 million units, Realtor.com says 6.5 million, mortgage-finance company Fannie Mae says 4.4 million and Up for Growth, a policy group focused on the housing shortage, says 3.8 million units.

Several issues have contributed to the country's current housing shortage, including the pandemic, inflation and increased interest rates. Essentially, though, it's a problem of supply and demand: New home construction dropped precipitously after the Great Recession and has yet to fully recover.

The transaction usually referred to as the "short sale of a house" is the selling of a house in pre-foreclosure state at a price that is less than the amount owed on the house. Houses that are short sold are typically either in pre-foreclosure (or about to be foreclosed upon).

The 2022 Land Report 100, compiled each year by The Land Report magazine, released its annual list of landowners who own the most acres in the United States. The nation's largest private landowners are the Emmerson family in California who own over 2.4 million acres.

Leading apartment owners in the U.S. 2022, by units owned

Starwood Capital Group, which was the largest owner in 2022 with 115,000 units, is a private investment firm headquartered in Miami, Florida.

According to a report from the National Multifamily Housing Council, the U.S. will be 4.3 million apartments short of meeting the demand for housing by 2035.

Story at a glance

California currently has the largest deficit of homes at 980,000.

Is the US housing market in trouble? ›

While a housing price correction is expected, we aren't in a housing bubble. Demand for homes remains high, and there are fewer home sellers than there were in 2022. And while the market is cooling, experts don't expect an actual housing crash or a housing bubble burst in 2023.

After falling in 2023 and 2024, home prices are predicted to plateau in 2025 before rising again at just above the rate of inflation. However, due to the spike in home values from 2020 through 2022 due to record-low mortgage rates, median sales prices will take at least until 2027 to regain the highs of mid-2022.

Chicago, Illinois, Houston, Texas, Dallas, Texas and Washington, DC follow, where the affordable housing shortage exceeds 150,000 rental units. The gap between affordable housing supply and demand is slimmer in Louisville, Kentucky, short by 15,300 rental units, and Buffalo, New York, short by 17,300 units.

Subprime Mortgage Crisis

Sometimes referred to as the greatest trade in history, Paulson's firm made a fortune and he earned over $4 billion personally on this trade alone. Paulson convinced Goldman Sachs to market risky home loans in Arizona, California, Florida and Nevada as safe investments.

The Bottom Line. Burry likely will be best known for being one of the few investors who predicted the subprime mortgage crisis that lasted from 2007 to 2010. He shorted the 2007 mortgage bond market by swapping CDOs and profited mightily from it.

A short seller, who profits by buying the shares to cover her short position at lower prices than the selling prices, can drive the price of a stock lower by selling short a larger number of shares.

China owns roughly 384,000 acres of U.S. agricultural land, according to a 2021 report from the Department of Agriculture.

1. EMMERSON FAMILY. The nation's largest private landowners, California's Emmerson family, are a prime example of this trend. Through their Sierra Pacific Industries, the Emmersons increased their landholdings by more than 100 square miles to over 2.4 million acres.

Homeowner vs.

In the under-35 age group, 65% of American households are rented. Meanwhile, in the 65+ age group (senior citizens), 79.3% own a home. The median age of homebuyers is 47 years old, while the median age of renters is 38 years old. A whopping 64% of millennials who own homes regret their purchase of a home.

Who owns the richest house in America? ›

In 2019, hedge fund owner Ken Griffin logged the highest amount paid for a residence on record in the US, when he bought a penthouse for $238 million in the lauded limestone tower.

Austria has the best housing system.

Housing cost in Vienna has remained around 25% of their income and they have largely avoided house price inflation.

As prices become unsustainable and interest rates rise, purchasers withdraw. Borrowers are discouraged from taking out loans when interest rates rise. On the other side, house construction will be affected as well; costs will rise, and the market supply of housing will shrink as a result.

Experts are predicting another 10% to 15% drop by the second or third quarter of 2023, according to multiple sources. Several other factors point to a further home price correction.

The US Needs As Many As 7 Million Homes.

California, Illinois, New Jersey, and Delaware are home to the most at-risk housing markets, according to a Special Housing Risk report released by real estate data firm ATTOM. “Some parts of the country remain considerably more exposed to housing market declines than others,” says Rob Barber, CEO of ATTOM.

New Jersey, Illinois and California lead the nation with markets where properties are vulnerable amid a housing downturn and possible upcoming recession, according to a new report from real estate analytics company Attom.

Will 2023 be a good time to buy a house? ›

Homebuyer.com data analysis indicates that, for first-time home buyers, June 2023 is a good time to buy a house relative to later in the year. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.

BENGALURU, May 31 (Reuters) - U.S. home prices will decline less than previously expected this year before stagnating in 2024, despite widespread expectations interest rates will remain higher for longer, according to property analysts polled by Reuters.

This slowing housing market is expected to pull the U.S. into a recession, which is forecasted to come at the beginning of 2023. But the housing market could also be what pulls the economy out once again, Fratantoni said. Interest rates could begin to decline next year after the Fed eases its rate hikes.

It's also worth noting that while foreclosure rates are up year-over-year, experts do not expect to see a wave of foreclosures in 2023, even where home values are depreciating, as many homeowners have substantial equity due to progressive home price appreciation in recent years.

The average life span of a house in the United States is about 50-70 years. Houses can last for decades if they are well-maintained and have been constructed with quality materials. A poorly built home may not last more than 20 years.

Personal homes will be almost fully independent of a dangerously overtaxed energy grid. One hundred years in the future, our houses will be, in almost all respects, semi-living, artificial organisms—closed systems with a metabolism, sensory apparatus, immune response, and an approximation to a nervous system.

Sixteen million homes currently sit vacant across the U.S. In every state across the country, many homes remain empty while hundreds of thousands of Americans face homelessness.

The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions of people losing their jobs and many businesses going bankrupt.

Five states—Kansas, Washington, Nebraska, Utah, and Missouri—have averaged less than one month of housing supply since the beginning of 2022. In contrast, eight states have averaged more than 2 months' supply, including expensive states for housing like New York, New Jersey, and Hawaii.

Who made money during a recession? ›

According to McKinsey report published in 2009, recession-resistant industries include consumer staples, healthcare, telecommunication services, and utilities, among more. In 2008, the total returns to shareholders fell for all sectors by over 20%, but consumer staples was an exception to this.

On the other hand, there is no limit to how high the price of the stock can rise, and because you are required to return the borrowed shares eventually, your losses are potentially limitless. This is why you are able to lose more money than you received from the investment in the short.

Article snapshot. Michael Burry, a successful American investor, has a net worth estimated at $300 million. Leaving behind a career in medicine, he gained considerable wealth from his hedge fund, Scion Capital, by shorting tech stocks and accurately predicting the 2008 housing market crash, which earned him millions.

'Big Short' investor Michael Burry predicts a US recession in 2023 and another inflation spike. Michael Burry said he expects the US to slump into recession in 2023 and inflation to spike again. The "Big Short" investor predicted inflation would decline overall in 2023 as the economy weakened.

Michael Burry rose to fame after he predicted the 2008 U.S. housing crash and managed to net $100 million in personal profits, and another $700 million for his investors with a few lucrative, out-of-consensus bets.

Property condition: Given the fact that short sale sellers are financially strapped, their properties tend to be in worse condition than average homes sold on the market. Therefore, the buyer often has to spend a lot more money on repairs and improvements.

Put simply, a short sale involves the sale of a stock an investor does not own. When an investor engages in short selling, two things can happen. If the price of the stock drops, the short seller can buy the stock at the lower price and make a profit. If the price of the stock rises, the short seller will lose money.

Furthermore, short sellers must eventually buy back shares. That creates some buying later on when most investors are afraid to buy. As a result, short sellers can actually reduce losses after a market crash.

Of the approximately 50 million rental housing units in the United States, around 41% of the rental units are owned by mom and pop landlords, also known as individual investor landlords. That means approximately 20.5 million units are overseen by mom and pop landlords.

65.8 percent of all Americans live in their own home as of 2022 that's about 230 Million Americans.

What companies own the most residential real estate? ›

Largest Real Estate Companies Research Summary

The largest real estate company in the world is Keller Williams Realty, with a revenue of $381.4 billion. As of 2023, the global real estate industry has a market size of $4.4 trillion. Over 5.8 million housing transactions were completed in the U.S. in 2022.

These properties were seen as high-return, low-risk investments since investors could buy them up at low cost, make minor repairs, and resell them once the market stabilized or turn them into rental properties. Since then, single-family homes have been a consistent investment opportunity in many companies' portfolios.

Homeowner vs.

In the under-35 age group, 65% of American households are rented. Meanwhile, in the 65+ age group (senior citizens), 79.3% own a home. The median age of homebuyers is 47 years old, while the median age of renters is 38 years old. A whopping 64% of millennials who own homes regret their purchase of a home.

65.8% of the U.S. population lives in a home they own, and 34.2% rent.

In fact, 72.5% of single-unit rental properties are owned by individuals, while 69.5% of properties with 25 or more units are owned by for-profit businesses. Most rental properties are owned by individuals, but only a small share of individuals own rental property, according to IRS income-tax data.

Today China is a country of homeowners with more than 90% of households owning homes (87% in urban and 96% in rural China) (Clark, Huang, & Yi, 2019). At the same time, more than 20% Chinese households own multiple homes, higher than many developed nations (Huang et al., 2020).

A third of California homeowners own their properties free and clear. Nearly 2.4 million homeowners across the state in 2021 had no property mortgage, the third highest among the states and Washington, D.C., the Orange County Register reported.

The country with the highest free-and-clear homeownership rate in the list above was Lithuania at 83%. In the U.S., the free-and-clear homeownership rate was 23%. If free-and-clear homeownership is the American Dream, then apparently Lithuania and many other countries are living the American Dream.

1. Donald Bren. Donald Bren began his career as a typical real estate agent, making his first investment in a real estate company that purchased over 90,000 acres of land. Bren was part of a team of five investors but eventually bought out the entire company in 1996.

Is the Catholic Church the largest landowner in the world? ›

After gaining permission from the Vatican, Burhans underwent a comprehensive of bringing the Church into the 21st century. A live database provides a visual of all its land holdings. Conclusion: The Catholic Church owns the most land, far more than McDonald's and billionaire Bill Gates.

The company can build equity.

If the company has borrowed money to purchase the house, it can build equity over time, essentially increasing the percentage of the home it owns outright and can then borrow against later on.

It makes sense that the Pandemic Housing Boom saw a flood of institutional homebuying. Low interest rates, easy access to capital, soaring rents, and skyrocketing home values were just too good a deal for Wall Street types like Blackstone and iBuyer players like Opendoor Technologies to pass on.

Invitation Homes is the largest single owner of single-family rental homes in the United States, managing more than 80,000 homes as of 2021.