House hunters in US are leaving the city, and builders can’t keep up with demand
Tired of being cooped up, eager to take advantage of low interest rates and increasingly willing to move two or more hours from the urban core, buyers have propelled new-home construction to its highest level since 2006. That was the year when the mid-2000s housing bubble started deflating on its way to what would become the financial crisis and Great Recession.
After a prolonged period of anemic sales since the housing bust, homebuilders now risk losing business because they can’t supply enough inventory. Home prices have shot up 11.3% over the past year, according to CoreLogic, keeping many people out of the market. At the same time, the cost of labor and raw materials — in particular the cost of lumber, which has more than doubled over the past year — is spiraling upward, pushing prices higher still.
Just as notable as the level of new construction is where it is taking place. From the mountains of central Pennsylvania to the one-stoplight towns beyond Houston’s endless expanse to California’s San Joaquin Valley, developers are racing to build homes in areas that buyers used to judge beyond the outer limits of an acceptable commute.
Over the past year, new-home construction in small cities and suburban areas rose 15%, compared with less than 10% in big cities, according to data from the National Association of Home Builders. “People can move to where it’s more affordable,” said John Burns, CEO of John Burns Real Estate Consulting. “This is a permanent game-changer in the housing market.”
U.S. builders are on a pace to start construction on 1.1 million single-family homes this year, the most since 2006. That is still well below the 2005 peak of 1.7 million homes, but double the sub-500,000 rate in the aftermath of the crash.
Growth on the urban periphery, while a boon for housing affordability, comes with environmental costs, chewing up farmland and perpetuating the car-centric lifestyles that are a significant contributor to climate change. In theory, if more people work from home, even in a hybrid capacity, it would offset some of those emissions by cutting down daily commutes.
Published at Sun, 30 May 2021 05:27:55 +0000