A lag in new construction has led to rising home prices.
What kind of impact have new construction and demographic trends had on our real estate market?
Keeping Current Matters recently published a report detailing how many homes have been built per decade from the 1930s up to 2020. In 1930, they found that roughly 5.4 million homes were built. Over the next two decades, that number increased by about 20 million. For every decade thereafter until 2009, there were between 20 and 27 million more homes built. Then, as you know, the housing crisis happened, and from 2010 to 2019, only 5.8 million homes were built.
When you combine this trend with the fact that millennials—the largest demographic in the country—have entered their peak buying season as first-time homebuyers, you have the primary reason home prices have risen. A lot of people can buy homes, but new construction hasn’t kept pace like it did in the previous decades. If they can get the supplies they need, home builders will be very busy for the foreseeable future. Interest rates will play a part in this, but not as much as you’d think.
If you’re thinking of building your next home, I encourage you to keep that under serious consideration. If you’d like help exploring that option or have any other real estate questions, don’t hesitate to reach out to me. I’d love to help you.