West LA & Westwood Real Estate Market
7 FACTORS DRIVING DEMAND SHIFTS IN HOUSING INVENTORY
Some areas of the US have been housing inventory-under-supplied for many years. Most of them are technology powerhouse centers that have experienced extraordinary growth and delivered enormous job opportunities and wealth creation. Seeking out these areas of future development has shifted somewhat in the past two years due to remote working opportunities. However, that is not the only factor driving demand shifts in housing inventory. Here are some others:
Leading Causes of Housing Inventory Shifts
1. RETIRING AND SEMI-RETIRING BABY BOOMERS. Almost 70 million have traditionally gravitated towards warmer climates with lower taxes – Florida, Arizona, etc. However, as these states become more expensive, they evaluate a broader spectrum of options. Many are choosing to live in multiple areas, and many continue working. Most are living longer, and most wish to age at home.
2. CAREER-AMBITIOUS-GEN-Z. Contrary to recent theories, young people are flocking to cities and areas where there are jobs and careers to be built. Doing so requires building networks, meeting new people, romance, and socializing. As a result, the demise of the city has been vastly exaggerated.
3. INSTITUTIONAL INVESTORS. Single-family home builders are now building exclusively to rent out or sell them to large, cash-rich institutional investors. We see this in areas where some may be unable or unwilling to commit to a purchase, often where home prices are out of sync with salaries. While many large city home prices are crazy-expensive, the wages being paid are often more balanced than in other ‘cheaper’ areas.
4. POLITICALS. Some people are moving cities and states because they disagree with local politics, taxation policies, and ideology, whether too restrictive or not restrictive enough. The political divisions have deepened, and many only want to be with ‘their tribe.’ Many realize sooner or later that all US states and towns are shades of purple. This re-shuffling is happening in both directions and is affecting the housing inventory.
5. MULTI-HOMERS. Many estimates indicate that Americans own about 7.5 million second homes – enough inventory to resolve our housing inventory shortages. Second homes are not the exclusive domain of billionaires: Owning two (or more)homes in two separate states/climate zones has expanded in popularity. Those who look at their real estate as an investment apply the concept of diversified risk just like they do with equity portfolios.
6. SINGLES. Traditionally, most homes were bought by those forming families. Now, many more singles are buying homes – about 19% of single women are buying homes – which means if the average family has two kids, sooner or later, they may need two houses, not one. Their parents live longer these days and hold onto their homes longer.
7. IMMIGRANTS. As an immigrant myself, the dream of owning a home in the US has – and always will be – top-of-mind. About 14% of the US population are immigrants/foreign-born. Over the past decade, nearly 1 million people immigrate to the US annually. About 40% of immigrants are homeowners. About 24% of those building homes are immigrants too. Immigration is a significant factor in housing inventory.
Additional Housing Inventory Data
For more information on housing inventory where you live, please contact the Shilian Group at (310) 299-7655 for the latest real estate stats and market trends.