Home builders continue to catch up during construction boom

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New house construction in the United States has reached an important benchmark in February, when more than 1.5 million residential building permits have been issued in the previous 12 months. This level of activity indicates a real estate boom that has not been seen since august 2007. The momentum continued throughout the summer, reaching 1.69 million permits in the year ending in August. This construction boom has drawn comparisons to the glut that characterized the Great Recession, but in truth, builders are only beginning to fill the gap in unmet demand that was dug in the fallout of the mid-1990s housing crisis. 2000s.

“Over the past few months, builders have stepped into the mix to build new homes and meet strong demand, and we’ve just seen the first full year of above-average construction since the mid-1970s real estate crash. 2000s, ”said Zillow’s senior economist. Jeff tucker. “This is not so much a new round of the new construction boom as an attempt to revenge the latest collapse. There is still a long way to go to catch up with more than a decade of slow construction, and some markets take longer to travel than others. “

Comparing new construction to population growth, Zillow estimates that since 2008, there has been a shortage of 1.35 million units in America’s 35 largest subways.I That is, there would have been 1.35 million new building permits for additional single-family homes issued had they kept pace with population growth at the same rate as between 1985 and 2000. At the current rate of issuance permits, this lack is as if no house has been built for 2.7 years.

Permits only tell half the story. These houses have yet to be built, but the activity of manufacturers has been hampered through supply chain disruptions and labor shortages. Despite the best efforts of builders, completion of new home construction has stalled after a scorching spring, and the latest reading shows an 8.4% drop from last year. The number of dwellings authorized, but not started, is up 44.8% from a year ago.I

It’s also not clear whether simply keeping pace with pre-recession construction is enough to meet current demand. The average household size is about as small as it has ever been – there are about 2.5 people per household now, up from three people per household as recently as the mid-1970s – which means more housing is needed as the population grows.iii There are also millions of “missing” households in the last 15 years: households headed by people who historically should have had their own accommodation at their current age, but who were unable or unwilling to move on their own. These households should be taken into account when considering the number of houses to be built.

The implications of this shortfall are now being felt as house prices rise across the country. The demographic makeup of the United States and the possibility for many to work remotely have stimulated the demand for housing. The housing shortage in the most densely populated markets has left home buyers competing for a limited supply, raise prices. Since the Great Recession, single-family homes have appreciated much more than other types of homes, such as condos and co-ops, up 47.9% since January 2008, against 29.4%.

Dallas experienced the largest single-family home building permit deficit after the recession, with 167,093 homes down than the pre-2000 average. Miami (142.650), Phoenix (122 288) and Seattle (113,292) also fell behind by more than 100,000 households.

Nine subways now have a surplus of new single-family constructions by this measure, including Chicago, Pittsburgh and Detroit. These nine subways have generally experienced modest population growth since 2008, and home value growth in all regions. Pittsburgh lagged behind the national average during this period.

There is no single solution to the housing shortage, and any solution will play out over many years. A panel of experts interviewed by Zillow earlier this year, he said easing zoning rules would be the most effective way to increase supply. Previous research by Zillow has shown that even taking into account modest densification in large metropolitan areas could build enough new homes to slow home price growth in the long run.

Metropolitan area *

New construction
Deficit: 2008-2020

Typical value of a house:
October 2021

Growth in home value
Since January 2008

United States

-1 350 459

$ 312,728

49.0%

New York, New York State

31 634

$ 569,191

22.5%

Los Angeles, CA

-13,008

$ 851,308

49.4%

Chicago, Illinois

73,467

$ 286,280

6.0%

Dallas – Fort Worth, Texas

-167,093

$ 332,118

107.0%

Philadelphia, Pennsylvania

16 949

$ 309,597

23.4%

Houston, TX

-64 354

$ 272,066

71.6%

Washington DC

-98 985

$ 520,598

23.0%

Miami – Fort Lauderdale, Florida

-142 650

$ 381,256

28.8%

Atlanta, Georgia

-78,593

$ 322,123

61.1%

Boston, Massachusetts

-63 160

$ 605,224

56.5%

San Francisco, California

-85,364

$ 1,346,995

86.8%

Detroit, Michigan

46 990

$ 225,066

41.6%

Riverside, California

-73,265

$ 525,941

45.9%

Phoenix, Arizona

-122,288

$ 418,170

58.7%

Seattle, WA

-113,292

$ 695,058

73.9%

Minneapolis – St. Paul, Minnesota

-35,159

$ 349,595

40.4%

San diego, california

-64 625

$ 814,289

65.6%

St. Louis, Missouri

43,300

$ 220,861

29.5%

Tampa, Florida

-56,654

$ 316,379

52.5%

Baltimore, MD

16 342

$ 349,655

6.2%

Denver, CO

-64,209

$ 574,734

122.8%

Pittsburgh, Pennsylvania

47,254

$ 200,185

65.7%

Portland, OR

-39,986

$ 532,300

67.0%

Charlotte, North Carolina

-23,756

$ 324,163

72.1%

Sacramento, California

-30.331

$ 567,023

57.9%

San Antonio, Texas

-83 824

$ 265,602

70.4%

Orlando, Florida

-63 824

$ 328,555

28.6%

Cincinnati, Ohio

5,183

$ 236,963

48.6%

Cleveland, Ohio

35 210

$ 199,110

34.0%

Kansas City, Missouri

-9 665

$ 259,200

63.2%

Las Vegas, Nevada

-48,480

$ 385,325

26.6%

Columbus, Ohio

-36 233

$ 266,594

63.7%

Indianapolis, IN

-11,171

$ 235,663

68.7%

San jose, california

-25,756

$ 1,493,020

87.5%

Austin, Texas

-51,065

$ 527,134

139.6%


* Table classified by market size

On Zillow Group
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I Comparison of the permit rate by population growth in each of the 35 largest metropolitan areas in the United States from 2008 to 2020 to the average American rate from 1985 to 2000.
I US Census Bureau and US Department of Housing and Urban Development, New Residential Construction, November 17, 2021.
iii US Census Bureau, Historical Households Table 4: https://www.census.gov/data/tables/time-series/demo/families/households.html.

SOURCE Zillow

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