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Let’s address the elephant in the room – “Where are all the available homes for sale?” This burning question has been raised time and again by numerous clients eager to find their dream home. 

Just the other day, one of my clients, Sarah, walked into my office, worry lines etched across her face. “Why are there so few homes currently for sale?” she questioned, frustration seeping into her voice.

It was clear that Sarah was not alone in her annoyance – many of my clients, just as eager to find their next home, are grappling with the same question, all victims of the lack of inventory in the current housing market. 

If you’ve found yourself in the trenches of the housing market over the past few years, this sense of frustration is something you can surely relate to.

As I was explaining to Sarah and my other clients why finding a house in Charlotte is so tough, I thought, why not share this with everyone?

So, here at The Finigan Group, we’ve decided it’s high time to tackle the big question at hand: why is there such a drastic dip in the availability of homes, not only here in Charlotte, North Carolina but also across the United States?

Not just that, we’ll also review some innovative solutions that could potentially improve this prevailing housing crisis.

For those of you who regularly follow our Charlotte Housing Market Updates, one key reason why the housing market remains red hot is the exceptionally low levels of housing inventory.

Here in Charlotte, the average home price has shot up by 29% since January, even with mortgage rates sitting at around 7%.  And to answer the big question – why such low housing inventory? The answer lies in a few key reasons.


  1. Lack Of New Construction

  2. Demographic Trends/ Changes

  3. Discouraged Homeowners

  4. Institutional Investors

  5. Restrictive Zoning Laws

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1. Lack Of New Construction 

The first major reason for the low housing inventory is the lack of new construction homes. This has been an ongoing issue, and to understand it fully, we need to rewind to the period leading up to the Great Recession in 2008.

Back then, construction of single-family homes were booming, with the rate peaking between 1.3 and 1.5 million homes per year. Builders were keen on cashing in on the early 2000s housing boom.

However, when the bubble burst, it left an excess of homes sitting idle on the market, causing a severe overcrowding of inventory. Builders then shifted their focus towards selling their current inventory of homes, rather than constructing new ones. During this time, many new home builders either filed for bankruptcy or went out of business.

Due to economic strains and a flood of housing inventory during this time, home prices fell by over 30%.

When home sales started to recover around 2011, builders were cautious about how many properties they introduced into the market. This led to a lag between the supply of houses and the demand from buyers. While construction rates have increased in recent years, they’re still well below the levels required to resolve the inventory shortage.

lack of housing inventory

2. Demographic Trends/ Changes

The second key factor contributing to our low housing inventory revolves around demographic shifts and a spike in household formations. Currently, millennials are the largest generation in the U.S., and they’re stepping into the housing market in droves. They currently make up a whopping 43% of home buyers, the largest portion compared to any other generation.

This situation is stirring up a perfect storm. On one side, there’s a considerable reduction in home constructions, and on the other, there’s a massive influx of millennial buyers in the housing market.  This combination has led to a significant spike in demand, all while we have steep fall in supply.

Over the span of eight years, from 2012 to 2020, a staggering 15.6 million new households were established. Moreover, in 2022 alone, more than 2 million households were formed – the highest in the past decade.

Meanwhile, only 11.9 million new homes were built during that time. As a result, by the end of 2022, we were faced with a housing deficit of around 6.5 million homes. 


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3. Discouraged Homeowners 

The third factor that’s playing into our low housing market inventory is the high mortgage rates are deterring homeowners from making a move.

 We’ve been accustomed to relatively low rates for a long time. However, in recent years, the Federal Reserve slashed their rates so rapidly that mortgage rates hit all-time lows. As a result, many homeowners either bought a new home or refinanced, locking in a 30-year mortgage at a rate of 2.5% to 3%.   According to a recent Redfin study, 82.4% of all current home owners in the United States have locked in a 30 year mortgage rate of below 5%. Nearly 25% have a mortgage rate below 3%. 

These homeowners now face a quandary when they want to sell their home and buy a new one. The current mortgage rate, which is around 7%-7.5%, is essentially double their existing rate. According to a survey by, 82% of potential home sellers feel effectively locked in their current homes because of these high mortgage rates.

Bear in mind that most homebuyers make their decision based on the monthly payment rather than the total price of the house. Typically, a 1% change in the mortgage rate impacts the purchasing power by about 10%. This dynamic adds pressure on potential home sellers.

At the moment, new listings hitting the market have plummeted by 25% across the U.S. and by 36% in the Charlotte area. 

Mortgage rates

4. Institutional Buyers 

The fourth factor playing into our low housing inventory is the influx of institutional investors acquiring available real estate. These institutional investors are generally large corporations or hedge funds, snapping up thousands of homes throughout the United States. Their goal is to purchase a home cash, and hold it as a long-term rental property.  

This phenomenon is no small matter. In 2021, these investors made up 13.2% of all U.S. home purchases. The issue is even more pronounced in the Charlotte area, where these investors have represented over 30% of home purchases in recent years.

This not only reduces local supply but also ramps up demand, as individual home buyers have to compete against cash offers. Moreover, institutional investors, once they own these properties, don’t tend to sell as often as regular homeowners do.

For a more in-depth understanding, we’ve previously recorded a video focusing on institutional investors and how they shape our market. Feel free to check it out if you’re interested: 

5. Restrictive Zoning Laws

The fifth factor that’s contributing to our housing crisis is how local zoning laws can limit the type of home you’re allowed to build. Often times, these zoning laws fail to evolve with emerging needs. 

According to an article published by NPR, the Chief Economist of the National Association of Home Builders cites overly restrictive zoning laws as a contributor to the housing shortage. Zoning restrictions are widespread in all 50 states, according to the National Low Income Housing Coalition, which cites a 2019 analysis that found up to 75% of residential land across major U.S. cities is zoned exclusively for detached single-family homes.  

Many of these single family lots are larger lots and can feasibly hold two or three homes on them. However, due to zoning laws, you’re restricted to what you can build on them. 

Other zoning laws may restrict more dense housing options like town homes, apartments or multi-unit developments. 

Potential Solutions To Our Housing Shortage

Are we doomed? Maybe not! While we don’t know what the future holds, there are a number of scenarios and steps that could ease the housing shortage in upcoming years!

1. Zoning “Find the Missing Middle” : A recent zillow survey found broad support for the “missing middle” homes in residential neighborhoods. They found that even modest densification measures, like allowing 2 units on 10% of single family lots in large metro cities could boost housing supply enough to slow home price appreciation.

2. De-Incentive Investment: We could create legislation that restrains institutional investors from purchasing homes.  We could also lower capital gains tax temporarily to incourage mom and pop investors to sell

3. Incentivize New Construction: We could create financial incentives that would encourage builders to build new homes that are within reach of many first-time home buyers.  The possible incentives run the gamut from federal supports and subsidies to better terms on construction loans to fewer local regulations and restrictions that sinificaltnly add to builders costs.


If you have a mortgage, your property taxes will be escrowed. Your mortgage lender will take a small amount every month to pay your taxes and homeowners insurance on your behalf once a year. If this is the case you don’t have to budget for these, they will be included in your mortgage.

When you’re shopping for homeowners insurance you should do your homework. The #1 mistake I see homebuyers make is that they don’t talk to a professional insurance agent right from the start. Right when your offer is accepted you should begin talking to homeowners insurance representatives. This will give you time to make sure there are no historical losses or claims that have never been fixed. You’ll also have more time to obtain a better idea of what type of insurance is best for you to cover those emergencies. This is very important in case anything happens, you’ll have the right insurance to cover it.

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The Future Of The Housing Market

Personally, I believe that we’ll be grappling with this inventory shortage in the housing market for the next decade or so. There’s no quick or easy fix to inject more homes into the market—homes take time to build. Therefore, it’s likely we’ll see a gradual shift over time if we start making the right moves now. As long as this inventory shortage persists, the market will likely remain red hot. Essentially, it’s a classic case of supply and demand.

The demand in the greater Charlotte area is strong, and with Generation Z now starting to buy homes, we’re looking at even more demand on the horizon, while supply remains an issue.

I believe the next significant shift we could see in the housing market will come when mortgage rates begin to fall. Although the Federal Reserve has hinted that it may not start reducing rates for another one to two years, once they do, many potential homebuyers and would-be sellers who have been waiting for lower rates will likely enter the market. This will not only boost demand but also increase the supply of homes as homeowners who refrained from selling over the past few years due to high rates will also start to sell.

If you are considering buying, selling, or investing in real estate myself and my team would love to be your real estate resource of choice. Feel free to call, text, or email us today! We would love to discuss your personal goals and identify the best plan of action to help you achieve your goals.



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“Find what moves you”
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Biggest regrets for Charlotte North Carolina homebuyers
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