What’s Causing the Housing Shortage in 2025?

By Mike Vonderau

Mike Vonderau is a top-rated realtor specializing in the west side communities of Cleveland, Ohio, and serves as the managing partner of Vonderau Real Estate Team.

If you’ve been checking out some listings, you’ve probably noticed how fast things are moving. Homes are listed and sold in a matter of days and some never even make it to a public showing. Buyers are competing harder than ever, and sellers are seeing multiple offers and higher prices. So, what is really happening? The truth is that this is more than just a competitive market. It’s the result of a serious inventory shortage that’s been years in the making. In places like Cleveland, it’s become especially clear. Today, I will break down the three major factors that drove the housing inventory crisis in 2025:

The 2008 housing crash changed the pace of new construction. When the market collapsed in 2008, builders stopped building and demand dropped almost overnight. Many construction companies closed. Meanwhile, those that remained became much more cautious. Even as the market recovered, the pace of new construction never returned to previous levels. For over a decade, fewer homes have been built than needed, and this has caused housing shortages in several parts of the country. Since there are fewer homes being built, buyers have less options to choose from.

The COVID-19 pandemic slowed down seller movement. When mortgage rates dropped in 2020, demand increased quickly because buyers wanted to take advantage of low rates. At the same time, many homeowners decided to stay put. If someone already had a low mortgage rate, they had little reason to move. Because of this, many homeowners chose to improve their current homes rather than list them for sale. More people also started working remotely during the pandemic, which meant that they could change jobs without relocating. Because of this, the demand for homes drastically dropped.

Baby boomers are not downsizing. Another factor adding to the shortage is a generational one. Many baby boomers are still living in the same homes they raised their families in—larger homes with multiple bedrooms, two stories, and finished basements. It’s not that they don’t want to move. The challenge is finding something that fits their needs. There just aren’t enough single-level homes, low-maintenance condos, or other downsizing-friendly options available right now.

What does this mean for you? If you are planning to sell, the market is in your favor. Low inventory means high demand. This gives you the opportunity to sell for more and on favorable terms. But just keep in mind that a solid strategy still matters.

If you’re buying, you need to be prepared. Timing is critical, and you need professional guidance more than ever. With a reliable agent by your side, you can still find the home that fits your needs and budget even in a tight market.

If you have questions about how the current market affects your plans, or you’re not sure where to start, feel free to call or text me at 440-871-3050 or email me at mike@vonderau.com. I’m here to help you make informed decisions and move forward with confidence.