Lisa Mailhot | July 12, 2023
Buyers
If you're currently searching for a home, you're likely experiencing a limited supply of available properties. The low inventory may be causing frustration as you struggle to find a home that suits your preferences. However, it's important to remember that opting for a newly built home presents a fantastic alternative. According to a recent publication by the National Association of Realtors (NAR):
“Home buyers continue to be met with limited housing options during what’s typically the real estate market’s busiest season. . . . The current supply of existing homes is about half the level it was in 2019 . . . Meanwhile, the market for new construction is a bright spot.”
To illustrate the growth of new home construction across the nation, let's examine a significant indicator called new residential completions. This metric represents newly built homes that have been finished and are ready for occupancy.
The graph below, utilizing data from the Census Bureau, displays the trend of new-home completions over time, including the long-term average for the number of completed housing units:
Looking at the left side of the graph (shown in orange), we observe that leading up to the housing crash, builders exceeded the average completion rate. This resulted in an oversupply of homes, ultimately leading to a decline in home values and the housing market crash of 2008.
Since then, new home construction has declined, and builders have failed to meet the historical average (shown in red). Consequently, the housing market has been grappling with a multi-year inventory deficit, contributing to the current shortage of homes.
However, here's the encouraging news: the green section on the right indicates that builders are now matching the long-term average, as reported by the latest Census data. This implies that they are introducing more newly constructed homes to the market than in recent years.
Additionally, residential starts and permits are gaining momentum. Starts refer to homes where construction has officially commenced, while permits are for homes where builders are planning to begin construction soon. The increase in both categories indicates a forthcoming influx of newly built homes.
The expanding number of newly constructed homes at various stages of completion means that your pool of options has just grown larger. If you're looking to move promptly and timing is crucial, reach out to a local real estate professional who can guide you toward recently completed homes in your area. If construction is complete, you should be able to move in quickly.
Alternatively, if you have the flexibility to wait and the idea of customizing a home appeals to you, consult the same agent about homes under construction in your area. By purchasing a home in progress, you can have a say in selecting features and finishes along the way. This personalized touch may be the best option when none of the existing homes meet your preferences.
Regardless of your approach, enlisting the services of a trusted real estate agent is vital. They possess knowledge of what's available in your area and can make recommendations based on your specific needs, desired neighborhoods, and more.
If you're struggling to find a home you like due to the limited inventory, it may be worthwhile to explore the option of new home construction. To initiate this conversation and ensure you work with an expert who knows what's available in your area, let's connect.
Explore three crucial strategies wealth managers must adopt to prepare for significant industry shifts, including the integration of technology, recruitment of new adv… Read more
Homebuilder stocks surge as Kamala Harris proposes housing reforms and the Federal Reserve hints at rate cuts. Discover how these factors could reshape the real estate… Read more
Explore the latest insights from July's inflation data and its subtle impact on future mortgage rates. This article delves into the PCE price index, Federal Reserve st… Read more
Explore the staggering monthly costs associated with maintaining a celebrity mansion, as revealed by Jennifer Lopez and Ben Affleck’s recent real estate troubles. Lear… Read more
Explore the escalating legal battle as the National Association of Realtors (NAR) prepares to take its confrontation with the Department of Justice (DOJ) over alleged … Read more
Explore the differences between incentive and protective trusts to safeguard your wealth and support your heirs. Learn how each trust type can influence the next gener… Read more
Governor Newsom signs two bills expanding housing options in California. Learn how AB 2835 and AB 3057 aim to address homelessness and increase affordable living space… Read more
Homeowners and investors anticipating lower mortgage rates after the Fed cuts interest rates may have to wait. Learn why longer-term Treasury yields are a better indic… Read more
Discover the groundbreaking antitrust lawsuit filed by Homie against the National Association of Realtors and key industry players, alleging conspiracies to stifle inn… Read more
Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most