No End In Sight For Housing Shortage Even Though 830,000 New Homes Are Expected To Be Built This Year

It’s no secret that the nation’s housing is in short supply, and investors who renovate and flip previously uninhabitable properties are part of the solution.

A survey by real estate investment marketplace New Western of 1,350 real estate investors from around the U.S. revealed that about 60% of respondents believe the U.S. is in a housing shortage, and 80% are selling homes at or above asking price after renovating the properties to make them habitable.

About 55% of survey respondents said the location or neighborhood is most important to their buyers. 

From the first quarter to the second quarter this year, New Western saw double-digit growth in more than a dozen markets, including:

• Boston, 88%
• Washington, D.C., 50%
• Charlotte, North Carolina, 49%
• Jacksonville, Florida, 48%
• Houston, 46%

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As consumers search for more housing options, investors are delivering much-needed supply back to the market. On average, homes purchased through New Western that are renovated sell for 31% less than new homes for sale in the same market.

“Investor sentiment is positive right now as they haven’t let the macroeconomic environment slow them down,” said Kurt Carlton, co-founder and president of New Western. “The U.S. is lacking about 320,000 listings valued at the affordable range for middle-income buyers. These investors see the housing shortage as an opportunity to deliver homes for buyers where the payoff is larger than the profits.”

About 830,000 homes are expected to be built this year, according to the National Association of Home Builders. Another 350,000 homes are projected to be rehabilitated and flipped. Investors are confident in the real estate market for the remainder of 2023, with about 70% of survey respondents planning to invest in one to three properties.

“New listing data is trending at all-time lows,” said Logan Mohtashami, housing data analyst and financial writer at HousingWire. “Housing demand stabilized from its waterfall collapse in 2022. In this environment, the opportunity to fill in the need due to the housing shortage is being tackled by investors. This is all happening with higher rates. If rates fall in this environment, demand has nowhere to go but up from such low levels.”

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