There may be a construction boom, but builders still have a lot of ground to make up from a decade of under-building, according to a new report from Zillow. Builder efforts are hampered by continued supply chain disruptions and labor shortages.
When comparing new construction to population growth, nationally, construction has fallen short of 1.35 million units since the Great Recession in 35 of the largest U.S. markets. That would be the equivalent of no new homes being built in the respective markets for 2.7 years.
The implications are seen across the country, as home prices continue to rise and limited inventory drives price growth. Single-family home appreciation has grown more than any other type of home, having risen 47.9% since January 2008, the report found.
“Builders in recent months have put the pedal to the metal to get new homes up and meet a rush of demand, and we just saw the first full year of above-average construction since the mid-2000s housing crash,” Zillow senior economist Jeff Tucker said in a press release. “This isn’t a new boom cycle of new construction so much as it’s an attempt to get even from the last bust. There is still a long way to go to catch up from more than a decade of slow construction, and some markets have longer to go than others.”
Boston has a shortfall of 63,160 homes, meaning that is the number of residential building permits that would have been issued if home building kept up with the same rate of population growth as it did between 1985 and 2000, Zillow found.
The implications of this shortfall are being felt today, as home prices rise across the country. A limited supply of homes has caused a surge in demand that’s driving the rapid price of home growth that has occurred throughout the pandemic.
Boston home prices have risen 21.4% since February of 2020, and they’re up 56.5% from the 2007 housing crash. The typical Boston home value in October was $605,224.
The implications of this shortfall are being felt today, as home prices rise across the country. A limited supply of homes has caused a surge in demand that’s driving the rapid price of home growth seen throughout the pandemic.
The implications of this shortfall are being felt today as home prices rise across the country. A limited supply of homes has caused a surge in demand that’s driving the rapid price of home growth seen throughout the pandemic.
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So we’ve all heard how Massachusetts and other Northeast states have been losing population. Right?
That might have been true a few decades ago. But not recently.
Over the past three years alone, Massachusetts has grown by 129,561 people, or by 2 percent, to about 6.6 million people.
Most of that growth has occurred in the Greater Boston area (Boston, Somerville, Newton and Cambridge are at the top of the usual-suspects list, not surprisingly), while the Cape and western Massachusetts are not doing so swell, population-wise.
So think about it: Where are the majority of those 129,561 new people living? Did new housing just magically appear? Do you think this growth — which is otherwise highly encouraging — is contributing to driving up housing prices?
Here’s some more interesting Bay State data from the US Census.
File under: More housing, please.
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