An epic shortage of housing!
In addition to high prices, buyers have the worst supply situation recorded this year. Buy Apartments in The Pearl | Property Hunter
According to a new calculation by realtor.com, almost half as many houses were sold at the end of February compared to a year earlier. Low supply was exacerbated in January and February by a fall in the number of new listings due to exceptionally icy weather in most of the country.
This is one of the most competitive housing markets in history today.
58% of domestic offers by Redfin agents faced bidding wars in January, up from 53% in December. It’s nine straight months, during which over half of all offers saw competition.
Urban flight? urban flight? Not exactly, not exactly.
There was plenty of evidence that New York and San Francisco residents escaped from the towns last summer, but the story of urban flights does not stand up completely. There might have been an exodus from large buildings and some renters chose to buy homes for single-families, but it really was more about relocating and rethinking living conditions than anything else.
People didn’t get away from cities, they just bought bigger homes in the city or moved to smaller towns where bigger homes are more affordable. The working conditions from anywhere have caused some to go south to more pleasant climates.
“The housing market in towns is as hot as we have ever seen for every talk of an urban exodus, particularly for single family homes,” said Daryl Fairweather, chief economics officer at Redfin. “There are many buyers with deep pockets financially advanced during the pandemic. You want a house with lots of space, but you want to live in a walk-in area near urban areas when you reopen shops and restaurants.”
Home prices are far above price growth in New York City and San Francisco in affordable cities like Detroit, Cleveland and Baltimore. However, New York is already seeing a return on demand. According to Douglas Elliman and Miller Samuel, sales contracts for residential property in Manhattan increased 73 percent in February of the year over year. And the shopping is fading.
What the housing market needs now are more homes, but home-builders fight.
They were unprepared for last summer’s surge in demand. Some constructors laid off workers and stopped operations at the beginning of the pandemic. They didn’t expect a recovery so strong.
Material prices have gone up, especially for lumber. The cost pressures are met by a shortage of skilled workers and a lack of buildable lots. According to the National Home Builders Association, higher prices have added about $26,000 to building costs for the average new house.
As a result, some construction companies, including several of the largest countries, are actually slowing production. According to NAHB’s chief economist Robert Dietz, the number of single family homes allowed but not started in December jumped 9.6 percent and was 28 percent higher than a year earlier.
The housing shortage has been exacerbated.
“We estimate that we still have a deficit of around 900,000 units in the United States, even in the case of households that are consolidating, as young adults are moving home with their families,” Ivy Zelman, the head of the Zelman & Associates housing research firm, said on a recent webcast by Willy Walker.
The growth of family rentals
During the pandemic, the supply crisis in for-sale homes gave the single-family rental market a huge boost. It only gets stronger, as indicated by all signs.
Rents for single-family homes have grown at a strong rate and are much higher than for multi-family homes.
Rental of a single family REITs have seen incredibly strong returns, just like American Homes 4 Rent and Invitation Homes. They are now specifically building houses for rent. The proportion of all houses built specifically for rent is steadily increasing.
“We are talking to builders who may have rented a hundred homes and a thousand next year,” Zelman said. “The size of growth in industry and the partnership with single-family operators is truly the strongest asset class. I call it the prettiest dance girl.”