According to Today's homeowner, the U.S. will have an increase of 0.4% by 2022. This is equivalent to about 1.25million people. Comparatively, last year 949,985 houses were for sale, showing a shortage in housing inventory.
Although this is national data the crunch in cities and the Southeast is more extreme.
Nick Willis, Greater Alabama Regional President with PNC, said: "I think that you're going to see a lot more people moving into the city." Parents who want to live closer to their grandchildren are moving to Birmingham. There, they can enjoy high-quality restaurants, health care services and a high quality of living. They can be closer to their children and grandchildren. You're still seeing migration from states with higher taxes into the Southeast, including Alabama and Birmingham.
According to the FDIC’s latest state banking profiles, the concentration of residential real estate loans in Alabama was down 5.8% from a year ago to the fourth quarter. According to the report, single-family permits fell 7.4% from the previous year's fourth quarter.
Investors are also seeing great deals on homes in the city.
Despite the volatile market, local and national investors make real estate investments every day to create wealth and passive income, according to Jason Lane Garrison.
Garrison stated that the challenge for investors is to find properties with a high cash flow. The increase in mortgage rates, home prices and rents relative to the amount of money the landlord is able to collect each month have presented cash flow issues for investors. AirBnB properties have allowed investors to increase their cash flow by allowing them to charge higher rates per night. However, these investments are not for everyone.
Mark Harmon, President of Renasant Mortgage Lending, says that investor purchases are a major factor in maintaining prices at a high level.
Harmon stated that there is a greater pool of investors who are buying, which keeps inventory under pressure. Smaller investors look for discounted prices to buy with the intent of reselling, while larger investors often use a build-to rent or buy-to-rent approach. This is true for both existing inventory as well as new construction.
Harmon believes that low inventories are a bigger factor than any one group of buyers in maintaining high prices.
Harmon stated that despite the slow increase in inventory, 'highest-and-best' offers continue to win many listings, with historically short market days.
It's important to remember that there is another factor.