Just a decade has made a world of difference in the new-build property market in the US. A recent builder’s survey comparing 2008 and 2018 shows just how much the new-build property sector has improved in ten years. Not only are all figures and statistics well into positive territory, the survey also highlights a shift in demand among two key generation groups. In both, the need for housing has grown significantly. This now forms the basis of a strong market for new-build property for at least the next decade.
Expected new-build property sales
The latest Builder Survey, compares the current situation in the new-build property market in the US with that in 2008. The survey takes in builders’ opinions from 83 metro areas across the country.
In June this year, 58% of builders described their current sales situation as “good”. 38% said it was “fair” while just 5% stated it was “poor”. Compare these figures to those in June 2008 and the situation almost reverses. Ten years ago, just 4% of builders said current sales were “good” with a massive 65% describing the scenario as “poor”.
Expected sales produces a similar situation. In June this year, 60% of builders said their expected sales outlook was “good”. In June 2008, this figure stood at just 7%. In 2018, a mere 2% of builders expect poor sales against 53% ten years ago.
Higher prices for fewer homes
In common with the property sector generally, the new-build property market in the US is experiencing strong price rises. Year-on-year appreciation of new builds in June 2018 stood at a healthy 6%. Back in 2008, new-build property was losing 11% value annually.
Inventory levels too have reversed. The Builder Survey reports that in June this year supply levels stood at just 1.5 units per community. In 2008, inventory levels were over four times higher at 5.6 units per community. The current underlying trend in new homes reflects the general lack of supply across the property sector as a whole.
The survey concludes that “demand for new homes remains strong, while low inventory and rising costs promote rising home prices”.
Strong demand makes up an important factor behind the resurgence in the new-build property market in the US. John Burns reports that two big generation groups – the Millennials and the Baby Boomers – have experienced important changes between 2008 and 2018 with important consequences for the new-build sector.
According to figures in the Builder Survey, the first-time buyer market has grown substantially over the last decade. 27% of those aged 25 to 34 live at home, compared to just 20% ten years ago. And while nowadays 50% of Millennials own a home at 37, in 2008 the average age for homeownership for half this generation group was 32.
A similar situation occurs among Baby Boomers. 45 million of them (61%) will be 60 this year compared to 1 million (11%) in 2008. This generation is particularly keen on relocation to popular retirement spots in the US such as Florida and Texas.
Florida features as one of the strongest areas for the new-build property market in the US. Builders highlight the Sunshine State along with North California and the Pacific Northwest as the three best markets for new builds in 2018. This mirrors the findings in the latest “Lay of the Land Market Report”, looking at the Florida land market and published by Coldwell Banker in May. The report concludes that “the market to find and develop land in Florida for new residential communities will continue to be strong”.
(Source: John Burns Real Estate Consulting)