There are many factors that make it difficult to buy a home today, but the factor that makes the “biggest difference” in today's market is the housing shortage, Property Brother Drew Scott said on CNBC's Your Money event on Thursday.
His brother, Jonathan Scott, added: “I don't think people realize that this housing shortage that we have is affecting everything.” The two host a home renovation and design television series. “From the problem of lack of housing to the cost of housing.”
The median U.S. home sales price was $412,300 in the second quarter of 2024, according to the U.S. Census via the Federal Reserve. That's down from $426,800 in the first quarter, and from a 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 buy a house, period,” Jonathan told CNBC.
Why is there a housing shortage?
As of mid-2023, there is a housing shortage of 4 million homes, according to the National Association of Realtors. New home construction has been slow in recent years, and more buyers are competing for available homes, pushing up prices.
Although there have been signs of improvement in housing supply recently, this is not enough to solve the fundamental constraints in the housing market in the United States.
The number of U.S. single-family home starts, a measure of new housing starts, rose to 1,027,000 in September, according to U.S. Census data. This represents a 2.7% jump from August.
Meanwhile, more home sellers came to the market in the fall. Many homeowners were under the influence of “lockdowns” or “golden handcuffs,” preventing them from listing their homes due to the record-low mortgage rates they received from the pandemic.
“It's okay if you wait a few years.”
Royal brothers Drew Scott (left) and Jonathan Scott.
Jason Davis | Getty Images Entertainment | Getty Images
Despite rising housing costs, buying a home is still a good investment, Property Brothers says.
U.S. homeowners with mortgages have net homeowner's equity of more than $17.6 trillion in the second quarter of 2024, according to CoreLogic. Home equity in the second quarter of this year rose by $1.3 trillion, an 8.0% increase from the previous year.
“You have to think long term,” Jonathan said. “It's okay if you wait a few years.”
Given the constraints of the housing market, Property Brothers says you can benefit from creativity, such as buying a home with a family member or even a friend.
