Many factors make it hard to buy a home today, but the one that makes “the biggest difference” in today’s market is the housing shortage, Property Brother Drew Scott said at CNBC’s Your Money event on Thursday.
“I don’t think people realize this shortage of housing that we have affects everything,” added his brother Jonathan Scott. The two host a home renovation and design television series. “From the unhoused problem to the cost of housing.”
The median sales price of U.S. homes was $412,300 in the second quarter of 2024, according to the U.S. Census via the Federal Reserve. That is down from $426,800 in the first quarter, and from the peak-high of $442,600 in the fourth quarter of 2022, the Fed reports.
“Give it another 20 years and literally no young person will be able to afford to purchase a home, period,” Jonathan told CNBC.
Why there’s a housing shortage
As of mid-2023, there’s a housing shortage of 4 million homes, according to the National Association of Realtors. Construction of new homes has been slow in recent years, and more buyers are competing for available homes, pushing up prices.
While there have been recent signs of improvement for housing supply, it’s not enough to solve the underlying constraint in the U.S. housing market.
Single-family housing starts in the U.S., a measure of new homes that began construction, grew to 1,027,000 in September, according to U.S. Census data. That is a 2.7% jump from August.
At the same time, more home sellers have come on the market in the fall. Many homeowners were under the “lock-in” or “golden handcuff” effect, which kept them from listing their homes because of the record-low mortgage rates they got from the pandemic.
‘It’s ok if you wait a few years’
Despite high housing costs, a home purchase is still a good investment, the Property Brothers said.
U.S. homeowners with mortgages have a net homeowner equity of over $17.6 trillion in the second quarter of 2024, according to CoreLogic. Home equity increased in the second quarter of this year by $1.3 trillion, an 8.0% growth from a year prior.
“You have to think long-term,” Jonathan said. “It’s okay if you wait a few years.”
Given housing market constraints, Property Brothers say you can benefit from being creative, like purchasing a home with a family member or even a friend.