Americans are ready to buy houses, but many of the houses just aren’t there.
A decade after the housing collapse, home construction per household is near its lowest level in 60 years, according to the Wall Street Journal. This is happening despite a fairly strong economy and a growing desire among millennials to start buying homes.
A variety of factors are contributing to the slump, including strict housing regulations, a land shortage, and a lack of construction workers, and demand is outpacing supply in places across the country, ranging from San Francisco to New York to Grand Rapids, Michigan.
The total inventory of homes reached its lowest recorded level at 1.48 million during the fourth quarter of 2017, according to the National Association of Realtors, and the National Association of Home Builders predicts that workers will start fewer than 900,000 new homes in 2018. This is causing prices to rise much faster than income growth and inflation, and it has sparked bidding wars across the country as well.
New York City approved permits for 99,124 residential units between January 2014 and August 2017, roughly 21 percent of which were affordable, according to the New York Building Congress. The city’s residential sector saw about $11 billion in development for 2017, down 31 percent from its 2016 peak of $16 billion.
There have been a few indications of improvement recently, including a homeownership rate that went up in 2017 for the first time since 2004. Additionally, for the 12-month period ending in February, single-family home starts ticked up by 2.9 percent.
However, construction is still lower than its historical averages, and the number of construction workers in the country dropped from 10.6 million in 2010 to 10.5 million in 2016, according to U.S. Census data.
“The workforce is in their 50s and 60s. They’re retiring and there’s no new bloodline coming in,” recruiter Todd Peuler told the Journal. “We didn’t get in this situation overnight, and it could take years to get out.” [WSJ] – Eddie Small