27 Oct Ups and Downs for New Home Construction
Metrostudy and Builder Online share that housing starts rose by 6.3% in September, which places activity 17.8% above September of last year. What obstacles are new home construction facing, and what’s playing in its favor?
The recession brought a great number of people who now are self-employed or work on a commission basis. While the salary is there and these people should technically be able to get a mortgage, they still cannot.
Builders are witnessing record land and lot prices, making them think twice about their current expansion plans.
Millennials that finally move out of their parents’ homes are still renting as their next step. First homes are not yet on their immediate radar.
Opposite the millennials sits the active adult market, and retiree demand continues to pick up at a fast pace. This is still a vast, under-served housing market that will accelerate even further in the next five years.
Mortgage rates are still low and are likely to remain so. This definitely pushes some potential new homebuyers off the proverbial fence.
The job market is steadily continuing to improve. Employment stability has a positive effect on new home construction.
According to Builder Online, it is hopeful that millennials will begin embracing the suburbs as they start a family. A study by the Demand Institute shows that 36% of millennials will rent when they get their next home but an equal 36% say they will buy a single-family home.
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