Building the Housing Deficit in Northern Colo Real Estate
For more than a decade, home building has not kept up with the demand for shelter, creating a housing supply deficit that has proven difficult to reduce significantly. In fact, the housing deficit in September 2016 was nearly 800,000 units – the widest gap between new household formation and housing completions in 18 years. While the monthly deficit has moderated substantially since then, home building has not increased sufficiently to close the gap left from more than a decade of under building. Why? Construction faces several supply-side headwinds: increasing material costs, a chronic lack of construction workers, a dearth of lots to be built on and restrictive regulatory requirements in many markets.
Despite these headwinds, there are signs of promise. January’s month-over-month gain of 9,000 residential construction jobs bodes well for more completions, and the modest growth in building permits, a leading indicator of housing starts, represents the green shoots of much-needed new housing supply. Home builder confidence echoes this sentiment, with builder confidence jumping to a four-month high this month. As builders begin to break ground on additional housing, we will inch closer to balancing our housing deficit.