Significant Housing Shortages Could Be on the Horizon

Significant housing shortages could be on the horizon, as the economy strengthens and household formation rates return to normal, particularly in the area of market-rate rental apartments.
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According to economists cited in the headline story of the latest edition of Nation’s Building News, including NAHB Chief Economist David Crowe, we can expect an eventual surge of demand from echo boomers, who comprise an even larger group than their baby-boomer parents. Meanwhile, NAHB projects that the industry will need to deliver 16 million homes over the next 10 years just to keep pace with demand. And as excess inventory gets worked off – likely by the end of 2012 – the long-run demand for housing will average approximately 1.5 million single-family and 300,000 multifamily units annually, or about 1.8 to 1.9 million total starts. This compares to the 591,000-unit pace of new construction that we saw in January. (Note: this year, production is expected to rise to 45% of normal, with a further increase to 67% of normal next year.) Read much more about our economists’ projections in the latest edition of Nation’s Building News.

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