Here’s an interesting chart that showed up on my desk via Barry Ritholz’s blog. It’s a chart of new housing supply in the US over a fifty-year span of time, and you really can see how the US housing new construction market has not yet recovered from the ’08 recession and financial crisis.
Check it out:
Ritholz quotes a Freddie Mac report about the graph:
Consider this: from 1968 to 2008, a span of 40 years, there was only one year in which fewer new housing units were built than in 2017 (Exhibit 1)—and this despite rising demand in a growing economy.
In a recent Insight, we examined the demand side of the housing market, focusing particularly on the experiences of young adults. Our research shows that housing costs have been the most significant factor preventing young adults from forming their own households as well as buying a house. Robust demand but weak supply has driven up housing prices rapidly, which in turn is acting as a force to balance demand against supply. Facing higher home prices and rents, many young people are doubling up in shared living arrangements or living at home with their parents.
Ritholz points to a shortage of labor and higher development costs as the key reasons for the low rates of construction, and argues that one reason why the housing and rental markets are so tight right now is that the US still have not caught up with average rates for new housing construction. At any rate, it’s some good macro context for the local housing market.