Greg Englesbe
Real Estate Investing

America’s scant supply of starter homes makes life difficult for Millennials

The frenzied state of the U.S. real estate market has been subject to analysis from practically every angle, from the rise of vacation homes in Florida to the allure of low interest rates. We’re experiencing an unusually supercharged market in the context of a pandemic that has only served to grease its wheels as buyers and sellers contemplate life-changing decisions. Investors also have had plenty to sink their teeth into under market conditions that strongly favor those with more resources at their disposal.

From a larger demographic standpoint, perhaps the most significant facet of the current housing market is the predicament of supply for a population of buyers struggling to find what they need.

It’s no secret that Millennials, the generation of Americans between 25 and 40 years old, are in their prime years to become homeowners. Though many have delayed decisions like marriage and having children, the group as a whole is still at life stage when purchasing a home is typically an aspirational investment.

But what Millennials need most — entry-level starter homes — happens to be the housing category under the greatest supply constraints.

A Freddie Mac analysis of the U.S. market found that the nation has hit a five-decade low in the construction of new entry-level housing, defined as homes under 1,200 square feet. The country saw just 65,000 new entry-level homes in 2020, compared to an average of 418,000 units per year in the 1970s and 207,000 units per year in the 1990s.

There are many reasons for this gradual decline in new single-family homes, but the impact has been unmistakable for the current generation of first-time home buyers. When there are too few affordable new homes and the inventory of existing homes in this category is limited, the cost of the homes that do exist goes up and competition forces many would-be buyers to shelve their plans.

The long-term impact of this trend is considerable, as the Wall Street Journal recently reported:

Delaying homeownership has far-reaching consequences for buyers’ financial lives. Those who became homeowners between the ages of 25 and 34 accumulated $150,000 in median housing wealth by their early 60s, according to an analysis from the Urban Institute. Those who waited until between the ages of 35 and 44 to buy netted $72,000 less in median housing wealth.

“This is a big deal,” said Sam Khater, chief economist and head of Freddie Mac’s Economic and Housing Research division. “We need to think about how we talk about affordable housing, because for most people, when they hear affordable housing, there’s an instant negative reaction. They think ‘low-income,’ right? The issue now is these fissures have not just invaded the middle class. It’s now going up into the upper-middle-income strata.”

If only 65,000 new starter homes were built in 2020 and there were 2.4 million first-time homebuyers, there’s a clear market mismatch that’s simply too wide not to have far-reaching effects.

Writing for Forbes, Joseph Edgar examined what’s holding up the construction of new homes that meet the needs of Millennials — and how long it may take to see the market fill the void:

You might imagine that the high demand for new housing would spark a lot of new construction from developers, but the rising costs of building a new home may slow that as well. Copper, steel, gypsum, lumber, soft lumber, plywood and ready-mix concrete have all seen record-setting price increases. These price increases are thought to be pandemic-related and, therefore, not long-term spikes, but it could still be a couple of years before pricing comes down and the market levels itself.

In addition, I’ve found that many builders who were burned during the 2008 recession do not want to invest in speculative homes and now build primarily based on sales. This means only those who have great credit or money upfront will be able to build homes, as many builders won’t risk the high prices of construction of speculative entry-level developments.

If we continue building at the current rate, I’ve seen estimates that we’ll likely need at least five years to get back to a construction rate of 1.5 million new homes every year, which will then alleviate the demand and potentially lower prices.

In the near-term, the pressures of the housing market likely will continue to force Millennials to make difficult trade-offs in value and location if they want to become homeowners. It’s a problem that underlies all of the hyperbolic language about the U.S. housing market in 2021. The people most likely to want to buy homes are left with options that will cost more than they want to pay and aren’t necessarily what would best suit their needs.

Photo Credit: Binyamin Mellish/Pexels.com

689 Comment

  1. Pingback: priligy at costco
  2. Pingback: stromectol 100mg
  3. Pingback: ivermectin 5
  4. Pingback: cialis tab 10mg
  5. Pingback: ivermectine
  6. Pingback: ivermectin
  7. Pingback: ivermectin sale
  8. Pingback: Anonymous
  9. Pingback: Anonymous
  10. Pingback: Anonymous
  11. Pingback: ivermectin generic
  12. Pingback: stromectol otc
  13. Pingback: ivermectin buy
  14. Pingback: cialis coupon
  15. Pingback: tadala
  16. Pingback: tadalafil otc
  17. Pingback: best tadalafil
  18. Pingback: tadalafil generico
  19. Pingback: tadalafil generico
  20. Pingback: cialis generic
  21. Pingback: cialis goodrx
  22. Pingback: real money casino
  23. Pingback: ivermectin powder
  24. Pingback: ivermectin near me
  25. Pingback: stromectol 12mg
  26. Pingback: ivermectin 6mg
  27. Pingback: ivermectin india
  28. Pingback: ivermectin uses
  29. Pingback: nih ivermectin
  30. Pingback: ivermectine kopen
  31. Pingback: Gz92uNNH
  32. Pingback: do-posle-psihologa
  33. Pingback: mectin ivermectin
  34. Pingback: DPTPtNqS
  35. Pingback: qQ8KZZE6
  36. Pingback: D6tuzANh
  37. Pingback: SHKALA TONOV
  38. Pingback: chelovek-iz-90-h
  39. Pingback: 3Hk12Bl
  40. Pingback: 3NOZC44
  41. Pingback: 01211
  42. Pingback: tor-lyubov-i-grom
  43. Pingback: film-tor-2022
  44. Pingback: hd-tor-2022
  45. Pingback: hdorg2.ru
  46. Pingback: JXNhGmmt
  47. Pingback: Psikholog
  48. Pingback: netstate.ru
  49. Pingback: 1interpolation
  50. Pingback: Link
  51. Pingback: psy
  52. Pingback: bit.ly
  53. Pingback: cleantalkorg2.ru
  54. Pingback: bucha killings
  55. Pingback: War in Ukraine
  56. Pingback: Ukraine
  57. Pingback: site
  58. Pingback: stats
  59. Pingback: Ukraine-war
  60. Pingback: movies
  61. Pingback: gidonline
  62. Pingback: web
  63. Pingback: film.8filmov.ru
  64. Pingback: video
  65. Pingback: film
  66. Pingback: filmgoda.ru
  67. Pingback: rodnoe-kino-ru
  68. Pingback: stat.netstate.ru
  69. Pingback: sY5am
  70. Pingback: Dom drakona
  71. Pingback: JGXldbkj
  72. Pingback: aOuSjapt
  73. Pingback: ìûøëåíèå
  74. Pingback: psikholog moskva
  75. Pingback: Dim Drakona 2022
  76. Pingback: TwnE4zl6
  77. Pingback: psy 3CtwvjS
  78. Pingback: lalochesia
  79. Pingback: film onlinee
  80. Pingback: 3qAIwwN
  81. Pingback: video-2
  82. Pingback: sezons.store
  83. Pingback: psy-news.ru
  84. Pingback: 000-1
  85. Pingback: 3SoTS32
  86. Pingback: 3DGofO7
  87. Pingback: rftrip.ru
  88. Pingback: dolpsy.ru
  89. Pingback: kin0shki.ru
  90. Pingback: 3o9cpydyue4s8.ru
  91. Pingback: mb588.ru
  92. Pingback: newsukraine.ru
  93. Pingback: edu-design.ru
  94. Pingback: brutv
  95. Pingback: order propecia 1mg
  96. Pingback: sitestats01
  97. Pingback: 1c789.ru
  98. Pingback: cttdu.ru
  99. Pingback: 1703
  100. Pingback: hdserial2023.ru
  101. Pingback: serialhd2023.ru
  102. Pingback: matchonline2022.ru
  103. Pingback: bit.ly/3OEzOZR
  104. Pingback: bit.ly/3gGFqGq
  105. Pingback: bit.ly/3ARFdXA
  106. Pingback: bit.ly/3ig2UT5
  107. Pingback: bit.ly/3GQNK0J
  108. Pingback: bep5w0Df
  109. Pingback: www
  110. Pingback: icf
  111. Pingback: 24hours-news
  112. Pingback: rusnewsweek
  113. Pingback: uluro-ado
  114. Pingback: irannews.ru
  115. Pingback: klondayk2022
  116. Pingback: tqmFEB3B
  117. Pingback: mangalib
  118. Pingback: x
  119. Pingback: 9xflix
  120. Pingback: xnxx
  121. Pingback: 123movies
  122. Pingback: kinokrad
  123. Pingback: batmanapollo
  124. Pingback: vsovezdeisrazu
  125. Pingback: 2023
  126. Pingback: ipsychologos
  127. Pingback: yug-grib.ru
  128. Pingback: studio-tatuage.ru
  129. Pingback: video.vipspark.ru
  130. Pingback: vitaliy-abdulov.ru
  131. Pingback: psychophysics.ru
  132. Pingback: medication otc
  133. Pingback: sildenafil us
  134. Pingback: fildena 100mg pill
  135. Pingback: clomid pill
  136. Pingback: strattera generic
  137. Pingback: androgel cost
  138. Pingback: vidalista
  139. Pingback: vidalista 20 bulk
  140. Pingback: hfa proair
  141. Pingback: testosterone gel
  142. Pingback: tadalista ct
  143. Pingback: fildena reddit
  144. Pingback: Buy Tamoxifen
  145. Pingback: vilitra 60mg
  146. Pingback: tadalista 5 mg
  147. Pingback: cenforce tablets
  148. Pingback: testogel
  149. Pingback: amoxicillin price
  150. Pingback: buy albuterol
  151. Pingback: lasix medication
  152. Pingback: vilitra 60 reviews
  153. Pingback: revatio
  154. Pingback: amox clav 875
  155. Pingback: priligy 30
  156. Pingback: ivermectin 12mg
  157. Pingback: furosemide 20mg
  158. Pingback: is vidalista safe
  159. Pingback: Cenforce us
  160. Pingback: vidalista ct 20
  161. Pingback: fildena 100 india
  162. Pingback: clomiphene for men
  163. Pingback: clomid 50mg
  164. Pingback: and clomiphene
  165. Pingback: clomid for women
  166. Pingback: clomid cycle pct
  167. Pingback: dapoxetin 60 mg
  168. Pingback: kamagra now
  169. Pingback: vidalista 20
  170. Pingback: vidalista
  171. Pingback: advair generic
  172. Pingback: ventolin generic
  173. Pingback: cenforce bogota
  174. Pingback: vidalista 60
  175. Pingback: buy vardenafil
  176. Pingback: Viagra Sildenafil
  177. Pingback: cenforce 100
  178. Pingback: Sildenafil Citrate
  179. Pingback: seretide 125
  180. Pingback: ventolin evohaler
  181. Pingback: cenforce 250
  182. Pingback: Cenforce 50mg drug
  183. Pingback: 5 mg buspirone
  184. Pingback: vidalista dosage
  185. Pingback: black cialis pills
  186. Pingback: olimelt 5 mg
  187. Pingback: Cenforce 150 mg
  188. Pingback: ivermectol
  189. Pingback: ivecop 12 tablet
  190. Pingback: ivermectine sandoz
  191. Pingback: buy covimectin
  192. Pingback: covilife 12
  193. Pingback: vermact plus 12
  194. Pingback: ivermectol 3
  195. Pingback: stromectol price
  196. Pingback: imrotab 12 mg
  197. Pingback: iverheal 12
  198. Pingback: vermovent
  199. Pingback: iverheal 12mg tab
  200. Pingback: levitra medicine
  201. Pingback: buy vidalista
  202. Pingback: cheapest kamagra
  203. Pingback: vidalista
  204. Pingback: cenforce FM
  205. Pingback: tadalista 20
  206. Pingback: Anonymous
  207. Pingback: poxet 30
  208. Pingback: fildena soft water
  209. Pingback: Qvar dosing
  210. Pingback: vidalista 40
  211. Pingback: rybelsus 14 mg
  212. Pingback: ivecop12
  213. Pingback: vomistop tablet
  214. Pingback: motilium amazon
  215. Pingback: cost of vardenafil
  216. Pingback: citalopram
  217. Pingback: celexa generic
  218. Pingback: iverscab 6 mg
  219. Pingback: iverscab 12
  220. Pingback: stromectol cost
  221. Pingback: vermovent 12
  222. Pingback: kamagra jelly pack
  223. Pingback: buy filitra
  224. Pingback: kamagra cost
  225. Pingback: viagra sildenafil
  226. Pingback: sildigra black
  227. Pingback: sildigra 25 mg
  228. Pingback: sildenafil cost
  229. Pingback: fildena oral
  230. Pingback: buy p force
  231. Pingback: fertomid tablet
  232. Pingback: fildena 100 india
  233. Pingback: cenforce 100 cost
  234. Pingback: clomid uk
  235. Pingback: cipla fempro
  236. Pingback: cenforce 100
  237. Pingback: vidalista black
  238. Pingback: cvs stromectol

Comments are closed.