Thursday, February 18, 2021
Do We Really Need That Many New Homes?
My Schwab news reports that new housing starts were 1.58 million units. Is our population really growing that fast? I realize that many builders are likely overbuilding to take advantage of current high demand driven by low interest rates, and some of them are going to end up houses with no buyers, but is there even close to that much demand?
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Yes. For a variety of reasons, demand for new housing was suppressed for several years following the 2008 recession.
ReplyDeleteNow, millennials have (at last) stopped delaying family formation, and are beginning to seek new housing that is appropriate to their new household circumstances.
On top of that, the new work-from-home reality means that lots of people can choose new places to live, so those locations are seeing a second factor driving demand for housing.
Plus, Trump's economy (even with the COVID black swan) finally put real economic growth in the pockets of regular middle- and working-class Americans.
So yeah, that's real demand - at least for the time being.
Yes, based upon the location of the new homes being in the suburbs, as people are fleeing the larger cities, especially democrat run cities. And, it's not just single family homes, but also apartment complexes. So, the new homes will likely sell, but there will be a number of homes in the large cities left abandoned, think Detroit...
ReplyDeleteThe only way the Texas housing market will slow from double plus emergency overload is when folks from other states quit moving here en masse. As the jackwagons in DC continue to "improve" life for everyone, that trend will only get stronger. I work for an Architect in central Texas, and let me tell ya, we could employ 3 guys for every one we have. We have clients waiting 3-4 weeks just for our initial consult. Unless/until the entire US economy goes pear shaped, we're set through September at least, right now.
ReplyDeleteAssuming 3 people per new housing unit, that's a population growth rate of about 1½%, which is somewhat higher than population growth. (2 people per unit is just under 1$, which is a little higher than current growth.)
ReplyDeleteBut as Thos. says, housing demand was suppressed, and housing supply was also suppressed for a while in the fastest-growing areas. The "housing advocates" will tell you that San Francisco proper added nearly 100,000 people, and maybe 5,000 housing units in the past couple of decades. It's similarly bad in LA and the Northeast.
Near us, yes. There are a lot of people that have moved from northern states. Many of those, as well as many locals, are also moving out from cities. Right now most of the homes being build around here aren't being built until there is a buyer. But a lot of subdivisions that have had vacant lots are becoming full.
ReplyDelete> On top of that, the new work-from-home reality means that lots of people can choose new places to live, so those locations are seeing a second factor driving demand for housing.
ReplyDeleteWhich is why we're seeing housing in places like Bozeman reaching NYC levels.
Add to the previous comments, our very low interest rates (from the government printing money at a rapid clip) make housing more affordable.
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