New economic data just released shows US new home construction up 16.9% in December, and it’s not enough to balance a backlog of demand. A separate report shows that from 2012 to 2019 builders built 5.9 million new single-family homes. In that same timeframe, 9.8 million new households were formed in the US. That is a shortage of 3.9 million homes.
In the aftermath of the foreclosure crisis we saw households forming and little to no new inventory being built because of the credit crisis. Sure, one of the reasons we had the crisis in the first place was because flippers built homes without end users in mind, so we had perhaps an over-supply. They were just flipping to another flipper. That crisis lasted several years with little home building.
New Home Construction Up 16.9% in December
Since then builders have been cautious about building anything on spec. Fast forward to today. We have a booming economy, low interest rates, and households still forming. In other words, nationally we have a shortage that needs to be made up.
States like Florida are seeing an influx of buyers moving here because of our tax structure. Let’s face it, Florida is attractive on several levels, not the least of which is great weather and sunshine. What’s new are the tax advantages. While Florida has always enjoyed tax advantages due to no state income tax, new tax laws have brought to light just how out of balance some states are.
For instance, high tax states like New York, New Jersey, California, and Connecticut are bleeding residents, and tax revenue as they leave. They are leaving in droves to lower tax states like Florida and Texas. One report suggests lower tax states gained $32 Billion in adjusted gross income. The booming economy has helped states collect about 6% more revenue overall, but states with lower taxes are doing better than the ones with higher taxes.
In the south, construction was only up 9.3% versus much higher in other regions. This tells us Florida has more need for building construction, and this could be putting upward pressure on home prices. Of course, higher prices do not work unless you have rising incomes to support it, and a booming economy.
Despite political turmoil, financial markets seem to shrug off impeachment hearings as not serious. If impeachment allegations were serious, the markets would not be stable like they are today, and the financial markets and housing markets would swing into chaos. The markets are betting all signs are pointing to status quo and no real changes coming to Washington.
Interest rates remain low, and oil prices have been steady despite regional tensions. With an influx of new residents to Florida, we see a need for new construction in Florida. Many homeowners in SW Florida would sell their home if they had a place to move to that meets their needs.
The Ellis Team has noticed an uptick in buyer inquiries into new construction opportunities. Some buyers only want to look at new construction. Many others don’t want to wait and focus on resales, while others look at both because they are flexible and searching for the best opportunity.
It’s important to work with a Realtor when buying new construction. The commission is built-in, so you don’t save it if you buy on your own. You also don’t get the expertise of an experienced Realtor who can guide you on options, locations, and designs that will maximize resale value when you go to sell. Making good decisions upfront can save you thousands later.
Lastly, builders won’t always tell you about incentives. For them you are just one sale. A good Realtor can bring them many sales, so they hear about the incentives offered. Just this past month alone our team has helped several buyers save thousands and helped them make great decisions that will help them years down the road when selling their home.
If you have a home to sell, Always Call Brett or Sande Ellis at 239-489-4042 Ext 4. If you’re looking to buy, our team of buyer specialists can guide you, whether it’s a new home or resale. Visit www.LeeCountyOnline.com to see all the homes on the market in real-time.
Good luck and Happy House Hunting!
See Last Week’s Article “Ellis Team Luxury Division of Fine Homes and Estates“