Hub City Homes: Trends and Transformations in Hattiesburg's Real Estate

The housing market is considered an essential component of the economy, consisting of buyers and sellers engaged in a constantly evolving interplay of supply and demand. Housing markets across the globe differ in size and characteristics yet exhibit similar patterns in terms of supply and demand. Supply means quantity of goods suppliers are willing to sell at different price levels during a given time period, while demand indicate amount of commodities or services that consumers are willing and capable of purchase. In recent years, the housing market in the US has experienced exponential growth in prices, particularly after the COVID-19 pandemic. The median house price in the US has risen by nearly 33%, amounting to more than a hundred thousand dollars, from 313,000 before the pandemic to 416,100 as of now, September 2023, according to the most current report from FRED (FRED, 2023). With more and more people moving to Hattiesburg, the city is also facing skyrocketing growth in its housing market like never before. Though the effect of demand and supply in the housing market is seen slowly and gradually, unlike other goods, it also follows the law of demand and supply. In this paper, we will examine supply and demand in housing, the relationship between them, and the factors that have affected the housing market in Hattiesburg, Mississippi.

THE DEMAND: In the recent few years, there has been a significant increase in the median price of residential real estate. Before understanding how much the median housing price has skyrocketed, we should first have an idea about the factors that contributed to the increase in price. As the law of demand states, an increase in demand for an object or goods contributes to an increase in its price. In recent years, Hattiesburg has experienced a notable increase in the demand for residential areas, which is the main reason for the soaring of real estate prices. According to the most recent data from the U.S. Census Bureau, Hattiesburg's population rose to 172,507 (as of 2021) up from 148,803 in 2016, resulting in a 15.9% increase in population within a short span of five years, making it the 16th among 381 U.S. cities (Stebbins, 2023). Factors such as low cost of living, better quality of life, hub city, and Hattiesburg's finest university, The University of Southern Mississippi, attract people not only from all over the country but also from different corners of the world to Hattiesburg. Similarly, the unemployment rate has decreased from 4.9% (December 2016) to 3.3%, as of December 2021 in Hattiesburg (Stebbins, 2023). This signifies more people being employed compared to the past. In addition, we can see an increase in the average household income in Hattiesburg to $58,850, which is 7.7% higher than the previous year (Point O’ Woods, 2023). An increase in average household income increases the purchasing capacity of an average individual, which in turn leads to a higher demand for that particular good, in our case, the demand for residential areas.

Demand for housing not only fluctuates like that of other normal goods due to an increase in the number of buyers, an increase in household income, or a decrease in the unemployment rate. People also tend to buy houses because they want to generate passive income. In simple words, people invest in real estate to combat the astonishingly high inflation rate and generate wealth. As per the U.S. Bureau of Labor Statistics, the existing inflation rate is 3.7% (Iacurci, 2023). This means we are losing 3.7% of our money if we do nothing and put it in a bank or lockers. Back in June 2022, it was even higher, at 9.1% (Statista, 2023). Even the rents of apartments have been astonishing ever since. The average rent for a two-bedroom apartment in Blainewood Oaks Apartment, Hattiesburg costs $770 per month, according to one of the residents. Buying a house is also somehow attached to emotion. When we have a family, we tend to prefer our own house, and for that reason, people buy them. These factors play an important role in increasing the demand for houses, and in the future, the demand for houses will likely increase more and more in Hattiesburg.

THE SUPPLY: In recent years, we have seen a significant increase in the price of houses, which leads to an increase in the supply of housing, making Hattiesburg's real estate market a perfect seller's market. As the law of supply states, when the price increases, sellers are willing to sell their products. Though the law of supply holds true for the housing market as well, it works differently compared to other goods. Due to limited resources and unlimited wants, it is difficult to maintain a constant supply in the case of housing. Moreover, if sellers are willing to sell their houses, it is somewhat difficult to match orders with buyers' demands, as the housing market operates at a slower pace compared to other commodities. According to a report from Home Light, the average listing period for any house in the US is 54 days, while in Hattiesburg it is even higher, at 101 days, as of the report from August 2023 (Rocket Homes, 2023). Several factors influence the supply of the housing market in Hattiesburg. As Hattiesburg is a developing city, people now adopt cutting-edge technologies while constructing buildings and apartments, which leads to reduced friction in completing projects and an increase in the supply of houses. Similarly, when the price of housing increases, many property owners see this as an opportunity to cash in on the rising property value, which increases supply. In a healthy market, homeowners or construction companies may be inclined to sell their properties to gain profit or move to other locations. However, if supply begins to dominate demand, we can see a decrease in property prices, leading to the creation of a housing bubble. The United States experienced a housing market crash in 2007, where real estate prices were dropping sharply day by day, equating to a loss of more than $2 trillion dollars, making popular hedge funds, financial institutions, and millions of people bankrupt (Singh et al., 2023).

CONCLUSION: Although there has been a significant increase in both demand and supply of residential properties in Hattiesburg in recent years, current data indicates that Hattiesburg's housing market might be slowing down compared to last year (Zillow, 2023). Though we haven't seen any substantial drop in housing prices in Hattiesburg, this could be due to the supply of houses being balanced by demand. However, as the population, economy, and purchasing capacity of residents in Hattiesburg and other places are drastically increasing, it can be assumed that the demand for housing will grow significantly in the days to come. The housing market in Hattiesburg remains dynamic and understanding the interplay of supply and demand will be crucial for anyone involved in the real estate sector or planning to buy a home in Hattiesburg, Mississippi.