Housing SHORTAGE on the Horizon... Really??

Interesting take from Mike Castleman, founder and CEO of Metrostudy, which tracks real-time data of the country’s inventory of new homes. Mike says a housing shortage is looming that will soon will create a huge surge in demand for new homes. As such, now is the time to buy, he says.

In the 41 cities Metrostudy covers, 78,000 houses are either vacant and for sale, or under construction — that is less than a quarter of the new homes that fell in that category during the housing boom in 2006 and way below the level of a decade ago. "If we had anything like normal levels of buying, those houses would sell in 2½ months," says Castleman. "We'd see an incredible shortage. And that's where we're heading."

Donna's Note: CNNMoney says yes, the "shadow inventory" is shrinking...slightly. But it's still about 1.8M... which is a lot more than 78,000

The historic drop in new construction mixed with the decline in housing prices is laying the foundation for a dramatic recovery in residential real estate, Castleman told CNN. Castleman expects home owners soon will start returning, which will drive up prices in many markets later this year.

While demand remains low for new construction, he expects that to change. He foresees the recovery following a similar path as previous ones: A severe housing shortage will drive a big increase in demand. “We'll get a big surge in demand and the drywall companies will take a long time to ramp up, and it will take years to get new lots approved,” he predicts. “Buyers will show up looking for a house in a subdivision, and all the houses will be sold. The builders will tell them it will take six months to deliver a house." But they’ll want the house so bad that they’ll “bid the prices up."

Donna's Last Note: Interesting take and yes, I do think this will happen, but my own crystal ball says it's not yet THIS year...And a rise in interest rates without a massive improvement in unemployment will keep the skids on any major improvement... just my 2 cents!