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Is the Housing Shortage Getting Worse in 2024?

The real estate market has been quite unpredictable for several years now. While waiting for home prices and interest rates to stabilize, one thing’s for sure–finding a home for a good price is difficult. Part of this is due to the housing shortage, which has been ongoing for over a decade. But where does it stand now? Today, we’ll review the status of the housing shortage in 2024, some of the causes, and whether or not it’s worsening. 

Contents of This Article: 

What Causes a Housing Shortage?

A housing shortage is caused by a number of factors. One of the most obvious causes is due to a lack of supply compared to the demand. However, several things impact the supply and demand for housing, including the cost of materials, a growing population, increasing mortgage rates, and more. That said, it’s important for investors and property management companies in Baltimore to understand the housing shortage and what may be causing it. Read along as we discuss some of the factors impacting the housing shortage in 2024. 

  • Rising Material Costs
  • Ongoing Supply Shortages
  • Growing Population
  • High Mortgage Rates
  • Institutional Investors

Rising Material Costs

One of the main issues contributing to today’s housing shortage is the rising cost of materials. Crucial components like softwood lumber, steel, aluminum, and other materials and equipment are all volatile in price, increasing housing costs. Some of the main factors impacting the price of materials include inflation, global trade disputes, sustainability initiatives, and more. 

Ongoing Supply Issues

The housing shortage in the United States is not a new problem. In fact, we’ve been dealing with ongoing supply issues for years. For the past 40 years, the housing supply has consistently lagged behind population growth. Some factors contributing to the housing supply shortage include labor shortages, a lack of land availability, and zoning and regulatory limitations. 

Growing Population

It makes sense that a growing population leads to fewer available homes. After all, considering the above factors, like rising material costs and preexisting supply issues, it’s no surprise that the current supply cannot keep up with growing demand. 

High Mortgage Rates

Mortgage rates play another large role in the supply of affordable housing. Mortgage interest rates were significantly low in 2020, around 2% to 3%. However, now, they’ve more than doubled, creating issues for the housing supply. After all, if you purchased a home or refinanced your mortgage in 2020, your monthly payment is likely favorable. However, your rates won’t be as good if you decide to move now. As such, it’s forcing many homeowners to stay put, making the number of available homes on the market even less. 

Institutional Investors

Finally, large real estate investors have also impacted the housing shortage over the past few years. Institutional investors who purchase large amounts of inventory to flip it or rent it out for profit create issues for aspiring homebuyers. After all, if investors continue to buy homes once they hit the market, prospective homebuyers will have fewer opportunities.

Is the Housing Shortage Getting Worse in 2024?

Unfortunately, the housing shortage doesn’t look like it will improve any time soon. However, it’s hard to say how long it will last. Homes take a lot of time and capital to build, and with all of the factors at play, it could take several years for the United States to recover

For now, prospective homebuyers’ prospects are not looking good. According to The Pew Charitable Trusts, there’s a massive shortage, somewhere between 4 and 7 million

How Can This Affect Real Estate Investors?

A shortage of available homes on the market can impact a real estate investor’s business in a few different ways, both positive and negative. For instance, it can be challenging for an investor to grow their business, as finding homes on the market to buy can be difficult. On the other hand, owning rental homes during a housing shortage can help keep rental properties occupied, putting more money in investors’ pockets. 

Whether you’re an aspiring homebuyer or investor or want to sell your home in 2024, there are several things to consider. Here are some tips for navigating the 2024 housing market. 

Tips for Investors or Homebuyers

  • Know Your Budget- While you may focus mostly on the price of the property you want, you should also consider your budget. Figure out how much you can afford for your monthly payment. Remember to consider your down payment, mortgage rate, loan term, insurance costs, and property taxes.
  • Remain Flexible- Finding the perfect home in the perfect location for the perfect price is going to be difficult. So, try to remain flexible about the size and location of the home you buy. Once you have your priorities figured out, you can search for suitable homes once they hit the market.
  • Keep an Eye Out- Look at the market in the area you want to buy and determine the price of homes there. Additionally, note how quickly they’re selling. This can help you determine when to buy and how prepared you need to be.
  • Don’t Give Up- Buying a home or investment property is a huge financial decision. That said, even when the market moves fast, don’t give up hope that you’ll find the right property.

Tips for Selling in Today’s Market

  • Research Comparable Homes- If you’re selling your home, knowing how to price it is important. Knowing your competition and pricing your home competitively can help you sell it faster.
  • Make Sure Your Home Is in Good Shape- Staying competitive in the market means having a home with curb appeal, modern touches, and clean features. After all, well-maintained homes will attract more potential buyers than homes without any curb appeal.
  • Work With an Agent- If you’re not sure where to start, working with an agent can be highly beneficial. They likely have strong marketing techniques and access to more real estate portals that can help increase the visibility of your home.
  • Don’t Put Off Major Issues- It’s important to ensure your home goes on the market without any significant issues. For instance, if something needs a major repair, doing it before putting your home on the market can help you set a more favorable price.

Protect Your Properties With BMG

Navigating the housing shortage in 2024 is challenging for investors, homebuyers, and renters alike. Rental investors face challenges such as knowing when to buy, finding a home at the right price, renovating properties, and setting the right rental rates. They’re also responsible for finding qualified tenants, conducting inspections, performing maintenance, and more.

Need More Advice? contact us today!

If you’re an investor and this sounds like too much–it’s time to find a reliable property management company. Luckily, Bay Property Management Group can help. Our team of experienced property managers can help with any step of the rental process. Contact us today to learn more about our services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.