What does a shortage of single-family residential properties mean for the multihousing industry?
A just-released report from Freddie Mac says the nearly-decade-long period of low residential property building is resulting in more demand for existing multihousing and other solutions for those seeking housing.
The inadequate supply of housing is due, Freddie Mac says, to increasing development costs and a shortage of skilled labor which has resulted in a slower pace of construction than what has been needed to meet demand. The impact is likely to be felt well beyond 2018, the report says.
The economy largely has recovered from the housing crisis and resulting recession that began in 2006-2008, but housing has not. The lower rate of construction of new housing units – single-family homes, apartments and manufactured homes – has thwarted many millennials especially in their search for a first home. The result has been that rentership of both single-family homes and multifamily properties continues to be high.
Many multifamily investors are responding by updating existing properties as well as repurposing various vacant commercial properties to meet renter demand.
According to the Freddie Mac report, “We estimate that 1.62 million units are needed annually to meet the housing demand: 1.1 million to accommodate household growth; 300,000 units to replace depreciated existing stock; 100,000 to meet the demand for second homes; and 120,000 units to provide enough vacant homes to maintain an efficient marketplace.”
The report concludes: “Until construction ramps up, housing costs will likely continue rising above income, constricting household formation and preventing homeownership for millions of potential households.”
To read the full report, click here.