Tuesday, August 20, 2019

Are single family homes going the way of the dodo bird?

 Now if you know me, I am not one to cry the sky is falling, but I can see a troubling trend that I feel must be said. 
**This blog is a bit long- but hopefully will make you think.** 

Many buyers are wondering where to find houses for sale in today’s market. It’s a true dilemma. We see an increase in buyer demand, but the supply available for purchase isn’t keeping up. There is so much construction that you see all over the valley, but a majority of it is multifamily housing, not single-family homes.
So, is that a good thing, or a bad thing?  Well depend on where you are at in your life, and your needs the answer varies. Starting out in life, a condo is better than an apt, because you are building equity and not paying someone else mortgage.  But as you get married, and your family grows, you may want to trade that urban condo in for a single-family home, so you kids can play in the backyard and you have more space.  If your kids have all left and you may have plans of travel and to simplify your life. When that is the case, then a condo may fit your needs just right. 
Now, with all that said, this graph is very interesting, as it is clearly showing a gap that the builders haven’t filled. The gap is with over 91 million millennials and the start of Gen Z (65 million) starting to buy homes, we are going to find ourselves in a precarious situation of not having enough room to house all these folks- if the builders, the cities and the states don’t step it up!  Just last month Oregon has stepped up to legislate against single family homes, Denver has made laws to entice builders to only build multi family properties, so will others in the future? This poses a big question: “Are single family homes going the way of the dodo bird? 

The number of new single family housing permits issued prior to the great recession in 2006ish-2010ish increased for 15 years until 2005 (from 1.12 million in 1990 to a pre-recession peak of 2.16 million in 2005). According to Apartment List- (see picture)
“From 1990 to 2005, the number of single-family permits issued more than doubled, while the number of multi-family permits grew by 49 percent.”
When the housing market crashed, the number of new homes permitted decreased to its lowest level in 2009.Since then, supply and demand have been out of balance when it comes to new construction. According to the same report;
“Construction of single-family homes has recovered much more slowly — the number of single-family housing units permitted in 2018 was barely half the number permitted in 2005.”
Why is new construction so important? As the U.S. population increases, there is also an increase in the need for new homes. Today, new construction is not keeping up with the increase in the nation’s population. The report continues:
“The total number of residential housing units permitted in 2018 was roughly the same as the number permitted in 1994, when the country’s population was 20 percent less than it is today.”
Essentially, the dip in home building coupled with the steadily increasing U.S. population means there is now a selling opportunity for homeowners willing to list their current houses.

Bottom Line
If you’re considering selling your house to move up, now is a great time to get a positive return on your investment in a market with high demand. But be ready to scourer the valley for the right home to move into.  There are products out there to help with these situations- so contact me to help guide you!