What the Housing Shortage Means for Homebuyers and Investors

It’s no secret that finding affordable housing is harder than ever. The United States continues to face a significant housing shortage, with experts estimating a shortfall between 1.1 million to over 6 million homes. What's causing this persistent problem?

Several factors are contributing to this shortage. Recent tariffs on critical building materials like steel, aluminum, lumber, and electrical components have significantly increased construction costs. Builders face higher expenses that inevitably trickle down to consumers. Meanwhile, tightened immigration policies have limited the number of skilled construction workers available, slowing down project timelines and raising labor costs.

At the same time, demand remains robust. Household formation, which is a key driver of housing demand, continues at rates above historical averages, despite minor fluctuations. More people forming new households means a constant need for new housing. Yet, because new construction has become increasingly difficult and costly, the gap between supply and demand continues to widen.

For homebuyers, this means fewer affordable options, intense competition, and higher prices. For investors, however, this challenging environment can create new opportunities. Investing in existing multifamily or single-family homes and adding value through renovations can offer significant returns. Properties that may initially seem unattractive could turn into profitable investments once improved.

Whether you're buying a home or exploring investment opportunities, staying informed about these market conditions and adapting your strategy accordingly is key to navigating today’s real estate landscape effectively.