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Construction Shortage forecast to Continue Until At Least 2022

Real Estate

Although the value of homes has improved since the last recession. Actually, the prices have gone up and even surpassed pre-recession values. However, the performance single-family units on the market has continued to show unsatisfactory results.

It is expected that the rates of starts for new homes will continue to perform well below historic averages for the next two years or more, this is according to a group of real estate experts.

The real estate sector has continued to register low listings over the last few years. Keeping construction at a minimum may cause an improvement in the demand for housing units, particularly single-family units. Those in the rental market will also stay there for a little longer, causing an increase in pricing pressure for both rental and for-sale units.

Based on historical data, single-family unit flinches have been at the one million mark for almost an entire month, and reach a high of 1.8 million in the year 2006. However, they went down after the great recession. Activity on the rental space has increased steadily after the recession but has not yet hit a historic high.

Some real estate experts think the number of single-family units will not surpass the 1 million mark for the next two years, with the pessimists forecasting that this is likely to last until 2029. One in five analysts believes that the threshold will be achieved by 2020, while one quarter is thinking 2021 is the surest estimate.

Zillow believes that home construction rates have slowed down significantly, and they are now behind what would be considered normal given that the population is growing increase at a fast rate.

When pushed for an opinion on what would increase the number of single-family units, the experts think that relaxing local regulations to favor projects of a given magnitude. The builders’ enthusiasm to increase market activity is pegged on future growth of value of homes.

Source Link: https://finance.yahoo.com/news/experts-construction-shortage-persist-until-120000177.html

About the author

Catherine Wambui

Catherine Wambui

Catherine Nyaga is a freelance writer covering Real Estate and Technology. Her other interests include Nature, pets and accounting. She recently graduate from Nairobi University with a degree in Accounting.

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