Friday, November 19, 2010

US Becoming Severly "Underbuilt"

According to a special study by economists at the National Association of Home Builders (NAHB), annual single-family housing production in 2008 and 2009 fell about one million units short of the housing that would be needed in a normally functioning economy, suggesting that builders will have a lot of catching up to do as the economy improves and household formations return to trend levels.  The report, "Extent of Underbuilding in the Single-Family Housing Market," finds that there was an excessive amount of single-family building from 2003 through 2005, but overbuilding largely ended by 2006 and the subsequent downturn was severe enough to more than offset those annual surpluses. This year is likely to add to the growing deficit of single-family homes by another one million units, the report finds.

"The single-family housing market in the U.S. currently finds itself in a significantly underbuilt state," said NAHB Chairman Bob Jones. "Pent-up demand for housing will at some point need to be worked off, pushing single-family production in a positive direction. In the meantime, the deficit continues to grow as builders remain cut off from the credit they need to begin developing and building new housing."

Accumulating annual surpluses peaked at 493,000 single-family units in 2005, and that was worked off entirely by the end of 2007. Depressed levels of single-family housing production resulted in a cumulative deficit of 2.17 million units by 2009 and will likely grow to 3.28 million by the end of this year.

The study also found that there are now single-family housing deficits in most of the states. This includes the states that had the hottest markets during the boom: Arizona, with a deficit of 144,500; California, 49,500; Florida, 112,600; and Nevada, 75,600.


If you are interested in a new home in Mercer County or the surrounding areas in New Jersey, I can help you find available developments and builders offering quality products.  I've been involved with the building trade here for more than 20 years, and can help you find the home that fits your needs.

Joe Giancarli, SA
Real Estate Advisor

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