The United States is not building enough homes to meet the nation’s housing demand. It’s difficult for many to accept this fact given some of the over-building that took place during the housing bubble. However that wave peaked around ten years ago and residential construction had since declined to historically low levels. This unprecedented weakness in construction activity has persisted over the past 6-7 years, with only limited signs of recovery. Here are two data points:
1. Residential construction spending as a fraction of the GDP remains suppressed.
2. Housing starts also remain extremely low, especially considering US population growth. This market has never recovered after the housing crisis – even to “pre-bubble” levels.
|Source: Federal Reserve Bank of St. Louis|
Part of the issue of course is the nagging tightness in the mortgage market, as homeownership rate continues to decline.
This is funneling more people into the rental market, rapidly tightening the availability of rentals across the United States.
Some view this as a bicoastal issue – of course the rental market is tight in Silicon Valley or New York City. Unfortunately that is not the case. Here are the vacancy rates in Ohio and Michigan for example.
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”