From 2008 to around 2016 new home builders stopped building and sat on their remaining lots. After the long wait, in around 2016, new home builders were able to get back out and build again, but at a much slower and more calculated pace. This slow and calculated pace is where we are today and what has lead to the shortage in inventory.
It’s been two years of searching for a new home and I’m finally under contract. It’s been an emotional roller coaster to say the least, and I’m thankful to be out of the mess. But I’m also sad for my fellow buyers and friends who are still in it.
I’m sure many of you have been wondering when the crash is coming. I’m here to tell you that there are no guarantees in life, however, the shortage in inventory is not just due to interest rates. I worked for a large new home builder in 2020 and 2021, and during this time I learned about the events that led to the inventory shortage.
Prior to the 2008 crash, new home builders were building and building with the assumption that there would always be buyers to buy their homes. Unfortunately, this assumption led them to lose millions and millions of dollars when the crash occurred. My particular builder lost so much money that they were actually selling some of their remaining homes in the negative. After the crash, builders stopped building and sat on their remaining lots from 2008 to 2016.
It wasn’t until 2016 that builders were able to get back out and build again, but the pace was much slower and more calculated. This slower and calculated pace is where we are today, and is the cause of the shortage in inventory.
So, if you’re one of the many people still searching for a home, I want you to know that it’s not just the interest rate that’s causing the shortage in inventory. The events of 2008-2016 have created the situation we’re in today. With that being said, I encourage you to use the Zillow mortgage calculator and enter a 20% down payment, and alter the interest rate from 8% to 2.75%. This estimation includes homeowners insurance and taxes, and is pretty darn accurate.
As I reflect on my two year journey I want to remind all the buyers and friends who are still in the hunt to keep your head up and stay positive. You’ll find your dream home soon enough.
It’s been an emotional roller coaster for sure, but I’m thankful to be out of the mess. To all my fellow buyers and friends still in the hunt, I wish you the best of luck and hope you find your dream home soon.