New construction is key to inventory woes, but small builders are largely absent. Yun is predicting a 1 to 
2 percent uptick in sales this year, to about 5.6 million units. Given favorable demographic trends and how well the economy is doing, that increase is much more restrained than it could be.
“This is really about lack of inventory,” Yun told thousands of REALTORS® at a residential economic forum he hosted.
Persistent low inventories are driving up home prices and making homes increasingly unaffordable for many households. Over the last half dozen years or so, home prices have grown 48 percent nationally while wage growth has increased just 15 percent.
New construction is the best way to bring prices down, but the number of new units coming on the market remains historically low (about 1.3 million now, compared to almost 2.5 million in the early 1970s), in part because small builders, who traditionally have built the bulk of housing in the country, are largely absent from the market.
They’re having trouble getting construction financing from the community banks they’ve always relied on, and their labor and material costs are going up.
That’s left the market mainly to bigger builders, and they’re focusing mainly on higher end homes.
There are 250,000 fewer new starter homes—those under $200,000—than there were three years ago.
“New units aren’t helping inventory that much,” because the new homes are mainly for move-up buyers.
The best way to bring home price increases down so that they’re more in line with people’s wages is to provide relief to community banks so they can start making construction loans to small builders again, Yun said.
At the local level, he called on municipalities to relax land use restrictions, modify condominium defect laws, and offer free training in welding, carpentry, and other construction trades for people displaced from other jobs. Modifying condo defect laws would ease the legal threat hanging over builders for minor construction defects.
Ready to Buy or Sell? If you’re interested on a wealth of information and 18 years of experience to help you get started visit us at Precision Realty & Assoc. LLC or if you prefer a more personal touch, CALL 801-809-9866 today.
#RealEstateForSale #Homeownership #UtahRealEstate #NewConstruction
2 percent uptick in sales this year, to about 5.6 million units. Given favorable demographic trends and how well the economy is doing, that increase is much more restrained than it could be. “This is really about lack of inventory,” Yun told thousands of REALTORS® at a residential economic forum he hosted.
Persistent low inventories are driving up home prices and making homes increasingly unaffordable for many households. Over the last half dozen years or so, home prices have grown 48 percent nationally while wage growth has increased just 15 percent.
New construction is the best way to bring prices down, but the number of new units coming on the market remains historically low (about 1.3 million now, compared to almost 2.5 million in the early 1970s), in part because small builders, who traditionally have built the bulk of housing in the country, are largely absent from the market.
They’re having trouble getting construction financing from the community banks they’ve always relied on, and their labor and material costs are going up.
That’s left the market mainly to bigger builders, and they’re focusing mainly on higher end homes.
There are 250,000 fewer new starter homes—those under $200,000—than there were three years ago. “New units aren’t helping inventory that much,” because the new homes are mainly for move-up buyers.
The best way to bring home price increases down so that they’re more in line with people’s wages is to provide relief to community banks so they can start making construction loans to small builders again, Yun said.
At the local level, he called on municipalities to relax land use restrictions, modify condominium defect laws, and offer free training in welding, carpentry, and other construction trades for people displaced from other jobs. Modifying condo defect laws would ease the legal threat hanging over builders for minor construction defects.
Ready to Buy or Sell? If you’re interested on a wealth of information and 18 years of experience to help you get started visit us at Precision Realty & Assoc. LLC or if you prefer a more personal touch, CALL 801-809-9866 today.
#RealEstateForSale #Homeownership #UtahRealEstate #NewConstruction
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