Why are there only 80,000 new homes available in the US?

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—Let’s get to it—

Why would I think about missing a shot I haven't taken yet?

- Michael Jordan

Today’s Rates

More sellers and price reductions, but fewer homebuyers link

• The housing market is experiencing a rise in inventory and price reductions due to higher mortgage rates, impacting home-buying affordability. For the first time since November, price reductions have increased, and the inventory of unsold single-family homes in the U.S. has grown to 498,000, marking a 16% increase from last year.

• Mortgage rates, now roughly 100 basis points higher than last year, are influencing the market dynamics, leading to a 16% increase in inventory and a slowing pace of sales. Despite more new listings compared to last year, the growth rate of home sales remains fragile, with the potential for further softening if mortgage rates continue to rise.

• The median price of newly pending single-family home sales dipped to $375,000, a nearly 1% decrease from the previous week, yet still 2% higher than last year. While home prices are not falling, the growth signals are softening, indicating a cautious outlook for the housing market as buyers wait for mortgage rates to stabilize.

Why are there only 80,000 new homes available in the US? link

• The current inventory of new homes in the U.S. is critically low, with only 80,000 homes available for sale. This shortage is attributed to several factors, including supply chain disruptions, labor shortages, and increased material costs, which have been exacerbated by the COVID-19 pandemic.

• The demand for new homes has surged, driven by low mortgage rates and a desire for more space during the pandemic. However, builders are struggling to keep up due to the aforementioned challenges, leading to a significant gap between supply and demand.

Why Today’s Housing Supply Is a Sweet Spot for Sellers link

• The current housing market is experiencing a unique balance that favors sellers, with inventory levels remaining low but slightly increasing from the historic lows seen in previous years. This trend suggests a competitive market where sellers can still command top dollar for their properties.

• Despite the slight increase in housing supply, demand remains strong, driven by low mortgage rates and a robust economy. This dynamic ensures that well-priced homes in desirable locations continue to attract multiple offers, often selling above the asking price.

• Experts predict that while the market will remain favorable for sellers in the short term, it may begin to shift towards a more balanced state as inventory levels continue to rise. Sellers looking to maximize their profits should consider listing sooner rather than later to take advantage of the current conditions.

Reshoring Puts Some Regions on Track for More Manufacturing Jobs link

• Over 300 manufacturing projects announced since 2020 are expected to create 210,000 jobs in the next decade, focusing on semiconductors, electric vehicle batteries, and other technology components. Phoenix and Atlanta are highlighted as major beneficiaries, with Phoenix expecting over 15,000 jobs from 14 projects and Atlanta over 12,000 jobs from seven projects.

• These projects, valued at about $400 billion, aim to increase domestic production and reduce supply chain disruptions experienced during the early pandemic months. The initiative is projected to expand the nation’s industrial property by 10% or 500 million square feet over the next decade.

• The reshoring effort is seen as a significant move to boost local and national economies, increase tax revenues, and create jobs. It underscores the importance of domestic manufacturing in enhancing industrial real estate demand and ensuring economic growth.

Florida Condo Prices Drop as Insurance Crisis Deepens link

• Florida's condo market is facing a downturn, with sales plummeting and prices falling due to skyrocketing home insurance costs. In January, Jacksonville saw a 6.5% drop in median sale price year-over-year, and Miami experienced a 2.5% decrease, highlighting the market's struggle against high insurance premiums.

• The high costs of home insurance, which have surged by 42% in 2023 compared to the previous year, are a significant factor in the market's downturn. This increase in insurance costs, coupled with the threat of weather disruptions, has led some insurance companies to exit the Florida market, exacerbating the crisis for condo owners and potential buyers.

• Condo owners are facing increased financial pressure as monthly maintenance fees soar, with some fees jumping from $400 to $700. This hike in costs is causing buyers to reconsider their options, leading to a shift towards single-family homes and leaving condos on the market for longer periods due to reduced buyer interest and affordability challenges.

How One Firm Is Helping Multifamily Cash in on Electricity link

• Solar energy is becoming a lucrative opportunity for multifamily properties amidst falling rents in major metros. PearlX offers no-cost solar systems in California and Texas, leasing rooftop space from multifamily properties to install these systems.

• This initiative not only promises a new revenue stream for property owners but also aims to lower electricity costs for tenants. Tenants pay PearlX for electricity, potentially at rates lower than those of existing suppliers, making it an attractive proposition for both parties.

• Excess electricity generated can be sold back to the grid, especially during peak demand times. This not only contributes to the property's income but also supports the grid in managing demand, showcasing a sustainable and financially beneficial model for multifamily properties.

All Time Vacancy Rates

Indianapolis Apartment Construction Expected To Keep Vacancy High 

Median Down Payment for a House by State 

The Global Outsourcing of Warehousing 

The global movement of talent is increasing 

That's all, folks.

Cheers,

Vidit

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