Housing Policies Need to Encourage Higher Rate of Construction
The housing market is tight, really tight. But, why is that?
Since 2009, housing demand has significantly outstripped supply, quite significantly in some areas. In 2015, more than a million new households were created, but only 620,000 new housing units were completed, creating a shortage of 430,370 units. This gap has pushed up home prices and rents, a trend that will continue for the foreseeable future absent imminent policy changes (Redfin.com).
As builders start work on more new houses, won’t supply begin to catch up to demand? Yes, at some point, but the supply-demand gap is expected to continue to grow for several years, even if household formation is flat. Chances are it won’t be. Millennials are still forming households and baby boomers are living longer and more independently than ever (Redfin.com).
Add on the burdensome regulatory environment and it creates a difficult scenario. Elected officials, especially at the local and state levels, need to work to encourage young buyers to enter the market and boost construction.
For the full analysis from Redfin.com visit here.