White House Wants to Solve the Inventory Crisis
According to a number of reliable sources, the White House has begun to develop plans to build in excess of 2 million homes to restore some of the shortage of affordable housing to the market.
The shortage of existing homes available for sale has produced a number of years in which home prices have increased by double digits year-over-year. According to CoreLogic Case-Shiller, its 20-city home price index increased by 19.1% in June from 2020.
In New Jersey both median sales prices and average sale prices increased this past July by 21% from last year.
What appears to make the market even more dire, from a political point of view, is that the number of homes for sale has fallen by 25% in New Jersey year-over-year. There is currently a 2.4-month supply of houses available.
In addition New Jersey shows a very hungry buyer looking to quickly take what available inventory there is. The number of days on market a single-family home in New Jersey has taken to sell has fallen from 59 days to 28 days as of July 31, 2021.
Researchers are stating that the 2 million houses that the White House is proposing to build of middle and low-income housing is still not enough, that what would close the gap significantly is 3.8 million homes.
What is creating additional pressure upon potential home buyers is the significant increases in the cost of materials and the cost of labor.
According to the White House Council of Economic Advisers, it is expecting to provide 100,000 affordable housing units over the next three years. In addition the current administration is seriously considering manipulating the mortgage rates to allow for faster and quicker first-time buyers to enter the market.
The administration is looking to use federal subsidies to cover the cost of the renovation and construction of these 2 million homes. In addition they are looking to provide new tax credits for construction in economically vulnerable neighborhoods.