But small multifamily buildings with 2-4 units dodge the CRE depression.
By Wolf Richter for WOLF STREET.
Housing construction starts in 2024 split into two opposing dynamics: Starts of single-family properties rose to the second highest level since 2007, while multifamily starts (condos and apartments) plunged for the second year in a row, both years combined by 35%, from 2022, which had been the highest level since 1986.
Single-family construction starts in the year rose by 6.5% to 1.01 million properties, the second highest since 2007, behind only the boom year 2021, having more than doubled from 2008-2010, according to data from the Census Bureau today.
For the past five years, single-family starts have run at very high levels, and unsold inventories have now piled up massively.
The pace of construction was such that it outran sales by a wide margin. Inventories of completed houses piled up to highest level since 2009; and inventories of houses at all stages of construction, from not started to completed, piled up to the highest level since 2007. Homebuilders cut prices and threw incentives at buyers in 2024 to keep up their sales, and sales were brisk, but construction was brisker, and inventories continued to build. Bring on the supply!
But multifamily construction starts plunged by 25% in 2024 from 2023, to 354,800 housing units, and are down by 35% from the boom year 2022, amid the large-scale oversupply that has been piling up in many markets for a few years, and amid the general depression in Commercial Real Estate, the long series of big CRE debt defaults, the losses investors and lenders have taken, the difficulty in getting new financing to start a multifamily project, and the impossibility in many cases to make those interest rates work with the expected rents.
Nearly 99% of these housing units were in buildings with 5 or more units. Only 1.3% were in small buildings with 2-5 units. More in a moment.
The multifamily construction boom rose from the ashes of the Housing Bust, and by 2014 construction starts ran at multi-decade highs, culminating in 2022 with 547,400 starts, the highest since the boom-year 1986. Despite the two-year plunge, starts in 2024 were still at relatively high levels.
Multifamily projects tend to be big and have long lead times. Projects where construction started in the recent peak year 2022 were in the planning stages years earlier. Many projects that had been planned but not started became stalled due to lack of financing as the CRE depression spread around. These projects are now on hold, without having started and are not part of this data. They’re further up in the development pipeline and are waiting for better days.
Small multifamily buildings, despite the plunge in overall multifamily starts, saw sort of a revival. Starts in buildings with 2-5 units rose by 36% in 2024 to 18,200 units, the highest since 2007.
Obviously, the numbers are minuscule compared to the 1980s and 1970s, but that’s the part of multifamily that seems to have dodged the CRE depression.
In densely populated urban cores, higher-end multifamily (condos and apartments) is just about the only type of housing that is getting built. With higher-end apartments, builders are targeting “renters of choice” – people wanting to live in a modern high-rise in a central location with all the amenities and conveniences and a short commute. Unless multifamily is subsidized, developers cannot cater to lower-income tenants or buyers because the numbers just don’t pencil out at current construction costs.
Single-family construction, now spreading further away from urban cores, includes the hottest trend in housing construction: “build to rent” developments designed specifically as rentals mostly for “renters of choice,” and built either by large single-family landlords or by builders that then fill the developments with tenants and sell the income-producing project to large landlords, pension funds, and other funds. The developments have common amenities, such as a pool, green spaces, a leasing and maintenance office, etc., and are much more efficient to manage for the landlord than individual houses scattered across their market.
Total housing starts dropped by 3.9% in 2024, to 1.36 million housing units, squeaking past 2007, and higher than any year in the 2007-2019 period:
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how:
It’s not the construction costs of close in housing that stands in the way of developers producing affordable units. It is the price of the dirt underneath the building that is the problem.
Could be the reason the lots are getting smaller.
It’s always in the dirt. Materials and labor are what they are. That’s why last bust finished lots were selling for less than 10 cents on the dollar, and raw land couldn’t even find a bid.
Yes well, I suggest that we may be about to witness the greatest land swindle since at least 2009. Everyday people, without a fat wallet, losing their LA property.
If there was a post office bank that loaned money fairly, yes, they could afford to rebuild. The problem is that they may not have enough liquid assets available to pay the costs of maintaining a burned out property and will sell their valuable asset for less than it’s value.
And I think you’ll see a lot more multi unit rentals going up around Altadena. Buy 2-3 joining lots that once had single family houses and put in 6-8+ apartments.
The housing market has 3 phases
– 2009-13 Industry Collapse – homebuilding died in America as anyone who could leave the industry did. Virtually no new homes were build creating a nationwide housing shortage.
– 2014-19 NIMBY Era – US economy recovered but all the good paying jobs were created in California & New York. Demcoratic politicians made it illiegal to build new houses in CA/NY because of “gentrification” or “social justice” or whatever. Supply & demand took over. In SF/LA/NYC workers made unbelievable salaries but had zero new homes to spend their money on, so the only option was to spend like a drunken sailor on an old home. Housing bubble!
-2020-now Building Comes Back – For a variety of reasons economic prosperity broadened out to places like Texas and Florida where, unbelievably, it’s legal to build housing! Today homebuyers can get a high paying tech job in Texas, and builders can legally build apartments, condos, and homes in Texas. Contrast this with the 2010s where the choices were no good job or a good job in San Francisco with no new homes – we finally have a free market in Texas & Florida where the free market is coming back to the housing market for the first time in 15 years. What does that mean for the housing bubble?
I lived in Texas when it was a decent place. I bought a house for $30,000 and that was not unusual. Almost anyone could afford a house and you never saw a homeless person. Texas was truly a blessed place in those days.
Now, thirty five years later, homeless people are everywhere, the infrastructure has been neglected to the point that I-35 is one continuous parking lot from Dallas to Laredo, real estate prices along with property taxes and insurance have skyrocketed. Crime and disease are rampant. It’s a dystopian nightmare out of a science fiction series.
……..”Crime and disease are rampant. It’s a dystopian nightmare out of a science fiction series.”
Yep, it sure is. And the Cops won’t help if I call. I sleep with my 9 MM under my pillow and I have a big dog. Well, he’s really not that big, but he sure can bark!
AJA…40 miles north of Houston and here since 1992.
9 isn’t nearly big enough in a big state like TEXAS. You should upgrade that to a 45. Yeehaw!
/s
Short, I use hollow points in my 9 MM and it’s semi-automatic. I don’t want to have high powered lead go through my cheap paper thin walls into the house next door. 9 MM is the “homeowner’s choice” around here unless you can handle a shotgun.
Pardon the sarcasm, 9 is indeed a good choice for home defense.
The population of Texas was around half of what it is now.
California construction is constrained by municipal zoning. Democrat state politicians were the ones who forced California cities to start zoning more density, which is a step to increase residential construction.
It looks like your knee-jerk politics have made you blind to reality. Ever heard of “builder’s remedy”? Here’s a hint: it’s part of a Democrat created law that (finally) forced rich neighbourhoods to allow more development.
The “NIMBY”ism against increased density comes from rich people of all political stripes. Unfortunately, your kind of finger-pointing lets city councils off the hook and sacrifices true solutions to the deity of pointless partisan outrage.
Why is there such high demand for housing when fewer children are being born?
My really nice CA working class neighborhood was ruined by the relaxed zoning laws. Adu’s everywhere. People turning their garages into condos. Zero street parking. From nice to ghetto in 18 months. I was a fan at first but when I witnessed the actual outcome I am no longer a proponent. There’s other solutions to the housing crisis. Penalize vacant property hoarders. Relax permitting fees. Accelerate permitting approval/denial. Etc etc
New York was the shithole in the 70’s through the mid 90’s. Staunch balanced budget Republican, Gerald Ford, refused to bail out Gotham. Mike Tyson gives an accurate narrative about what it was like to grow up in that culture.
Finally, the butter milk of Federal money in the form of financial deregulation arrived. Rags to riches.
Alpha poodle,
I wouldn’t call it free market but simply differences in regulations. Too little regulation obviously has problems which we have seen in Florida and Texas, and of course too much also is negative. Obviously the challenge is finding the sweet spot.
1:04 PM 1/17/2025
Dow 43,487.83 334.70 0.78%
S&P 500 5,996.66 59.32 1.00%
Nasdaq 19,630.20 291.91 1.51%
VIX 15.97 -0.63 -3.80%
Gold 2,740.00 -10.90 -0.40%
Oil 78.04 -0.64 -0.81%
I’m surrounded with new homes being built and there are builder signs everywhere along the roads. Thousands of new homes going up around me and they all will be 1.200 – 2.500 square feet in size. All “builder grade stuff”.
Too bad Rod Sterling was not alive as he could make a Twilight Zone session out of this.
Forests being taken down in one fell swoop, tree and stumps ground up into saleable mulch, ancient topsoil stripped off and sold, and red clay brought in to replace the old dirt.
It’s crazy here……(south Texas)
I moved to Texas in 2021, and I cringe every time I see that happen. Beautiful land, beautiful large/mature trees, and then 2 days later…BAM!!! It looks like a dessert with piles of mulched up trees. Like a hurricane came by, leveled it all, then a tornado stopped by and whipped up the piles.
The building has slowed here in North Texas when compared to a few years back. Some projects pulled back their phases, and the “Homes from the $###,####” signs stopped being changed. In 2021, a development nearby started at $800K. Every 3 months, the signed was updated to add $100K. By the time they had sold 90% of the development, the sign said $1.6M. They’re just about finishing the last homes.
A different development was scheduled to deliver homes in early 2025. Back in the Fall of 2023, they bulldozed the land, cleared it all, surveyed all the lots, started bringing in utilities, and then it just stopped. I drive by it every day, still no foundations being poured.
50 or so miles outside DFW, they are building like crazy. Similar to what you wrote about South Texas. The Metro keeps growing, it’s amazing how towns just sprout out of nowhere.
Is Texas the hubris before the fall, as the corporations settle in. It reminds me of something that an old economist, my everyday father opined, cancer grows the fastest,
dang – I’m not originally from Texas, but I don’t think this is “hubris before the fall.” Texas is the second largest economy in the US after California. One of the fastest growing states. Like everything, there are growing pains, but we somehow figure it all out.
I moved here from NY, just outside NYC. The sentiment in NY among friends and family has always been “things are going downhill” or “we sure do miss the good ol days” or “this neighborhood is going down the drain” and all kinds of other complaints and downright ungratefulness. It’s a great place to live in my opinion and we loved every minute of it. The people are tough to handle, but you get used to it.
People in TX seem much happier. Everyone smiles, they greet you, hold doors, are all very polite, and there’s a sense of gratitude.
$1.6 million?
And thats a neighborhood you don’t have worry about me moving into.
I know. You keep out the riff raff with those prices. But now EVERYTHING is built as luxury.
Where are us riff raff supposed to live in America?
The idea is to live adjacent to these neighborhoods. That way you’re not paying those insane prices, but still get “contact high” if you follow my drift.
I’ve lived in the “hood”, not the “hood”, next to the “hood”, standard median priced home, and above median price home. I’ve gotten my car broken into, my shed broken into, bicycles stolen, motorcycle stolen before. In my book, a little peace of mind is worth the extra money.
Well, a number of large companies have relocated from California to Texas. Incoming Californians have no concept of what a south Texas house costs because the company just bought their home at California prices. An extra 250K doesn’t really register.
I’m way north of Dallas and all the farms and ranches are being paved over by subdivisions and massive apartment complexes. They’re saying the Metro area will reach Oklahoma
I’ve been saying all along that people want smaller, single family homes. Isn’t that the American dream? Especially now that most families have far less children.
Not in Beverly Hills.
I’d like to buy a 2br/1ba but it doesnt make sense when only 3br/2ba or bigger is built and they cost marginally more than a 100 year old mining town hovel.
But that doesn’t make financial sense.
My first house was a 2 br/1ba. A 850 sqft 1939 bungalow. I loved that house, even though it needed a ton of work. Perfect for 1 person, a bit cramped with two. 3br are for families.
Yep. Lived in a 2/1 for nearly 8 years until kids happened.
I recently bought the house I grew up in. I rent it to young couple with no kids, perfect for their station in life. It’s small (700sqft/2br/1ba), but when I was young we were poor and lucky to be paying mortgage instead of rent.
Long boring personal case study follows, you’ve been warned –
It’s a neighborhood of small brick sfhs built in the 1860s by and for German immigrants. 1 mile south of downtown/midwestern capital city with a booming economy these days.
When I was a kid in the 70s and 80s most of these homes had been chopped into 2-4 unit efficiencies to house the Appalachian migrants who replaced the Germans (wiki Hillbilly Highway) – a low income/high crime area.
But in the section closest to downtown people were buying these dirt cheap, trashed, cut ups, and converting them back to single units. They did much of the work themselves, and lived in their construction sites while they did it. That ain’t easy. Then they stayed (by and large) instead of selling them and taking the quick gain. They were building a community, one that was (again by and large) respectful of the indigenous residents (us).
Fast forward to today – the whole area is gentrified to the point of yoga studios and pet groomers. Lots of infill, conversions and tear-downs outside the historic district. My old middle school is a high end condo building. There’s no indication that the area had ever been poor if you don’t go too far south or east. I’m not sure who to root for, but I know who’s gonna win.
I’m raising a family (2daugters) in a 2/1, under 1000sf.
The problem is that people have a baby and “need to” upgrade to the 3/2.
Baby #2? The 4/3 is reasonable.
Now everyone needs a 4500sf home with nice, new finishes. Hence building a $1.6MM neighborhood.
Shelter, as well as food, should never make financial sense. They are necessities. One just has to find such that fits the income stream they have.
Why not just rent a 2BR apartment? Seems a lot cheaper than buying these days. Then invest the savings, seems like you’d be better off that way.
@Bailouts4Billionaires you are correct that most people will have more cash if they rent an apartment rather than buying a house. They will also have more cash if they sell their car and ride their bike to work, and have even more cash if they stop drinking and eating out. My advice to people is do what makes you happy, if you are happy with an apartment and a bike you will have a LOT more cash than a guy with a home in the Bay Area and a late model Mercedes.
Mostly because I work nights and on call 24/7 and the older I get the more and more difficult it is to sleep.
I spent a few years working nights and staying on hotels. People are so self-centered they don’t care how much noise and annoyances they make around them for other people.
Never lived in an apartment but I can only imagine how miserable it would be with the noise and lack of sleep.
I don’t even like subdivisions with all the hardcore survivalist tough guy “alpha males” that have a straight piped turbo diesel pickup that have to take it to redline every morning in their suburban neighborhood so they can roll coal on all the beta’s around them that aren’t true warriors like they are. Or whatever tf their problem is with the world around them.
I just want a small house or cabin out in the woods with no neighbors. I live in the PNW. I don’t think there is a place in the US with a more unpleasant populace.
Trucker,
Kids growing up in a place with a strong logging heritage have one hell of a problem developing an identity…..when the lucky ones write code, maybe manage a coffee shop, and the unlucky ones work in those shops or some other kind of “service job” (“servicing” the richer folk, and thereby building up THEIR identities).
Those “macho vehicles” are maybe all they know of to build an identity on.
I know they have to go really out of their way to get their symbols muddy to return to their shared room in a city apt. (some “entrepreneur” should open the opposite of a car wash for them…ie, spray mud, clods…to save them precious sleep time and gas money)
You can see it clearly in the commercials, right down to coming home muddy after supposedly being out doing “truck stuff” (an ACTUAL line and scene from a truck commercial, BTW).
Pity them if you can….I know it’s hard….but for sure save being real pissed off for the manager class….who are not letting up one tiny bit as they continue to crush any and everyone for profit, with any new innovative way possible….and are admired for it….aka. being “entrepreneurial”. Actually, even some of them get trucks or a Harley for the same reason.
Sad situation, very very sick society.
I agree with a lot of the cultural phenomenon we are seeing is a result of the ruling class becoming more and more omnipotent.
However most of the “belligerent bro” culture in my area is wealthy middle and upper middle class middle aged whites who have fled politically left areas and states and are playing pretend tough guy as they work upscale jobs and blow huge sums of money on status symbol toys from the housing windfall of selling a home in LA or SF and moving to North Idaho or Eastern WA.
There are scarce few native locals in this area. I’m not one myself. Most of the locals who were born and raised here and somehow managed to scratch out a living and didn’t move are pretty easy going.
This area is seen as a political and cultural refuge for the militant right wing crowd. There are a whole lot of California state pensioners or “real estate lottery winners” who have come here to retire somewhat early and to shake their fist at the sky about how much they hate society and the government while being some of the select few who have all the amenities of society and largess of the government. Deeply unhappy people with vapid materialistic fixations and narcissistic behavior.
I’ve always wondered where the stratification in the US among specifically White Americans comes from in their behavior. The most unpleasant white people I have been around have been on the West coast and Colorado. This would imply a political slant superficially but this is not the case. Rural Oregon and North California have been home to some of the most radical right wing whites I have encountered and they suffer from the same generalized hostility to their fellow human. Additionally, I have not seen this behavior in left wing nor right wing Eastern states. Even in places with allegedly bad attitudes like NYC, Boston, or New Jersey.
It is incredibly fascinating to me and I haven’t figured out any connection, link, correlation, causation, etc. I’ve also only seen it in whites not to make things arbitrarily racial.
It isn’t a geographic occurrence either. The rocky mountains don’t seem to cause white people to be angry miserable little shits. Southern Idaho, Utah, Wyoming, New Mexico, and to a lesser extent, Nevada, and Arizona have less hostile white people. NV and AZ probably being disproportionately higher with Cali transplants.
Again, it’s all anecdotal evidence and lived experiences aside from where I have spent a lot of time now in Eastern WA and North ID. But I can say, the native crowd in this area are usually decent people. The transplants; particularly from Cali or Seattle/Portland are almost universally terrible to be around. Assuming they are white. Which almost all are since this area is well over 90% white.
My point still stands though, for whatever reason, this area brings in an unfriendly populace with identity and insecurity issues. And they’ll wear it as a proud badge on their sleeves with no self-awareness or concern to the others around them.
I’m slightly guilty myself, I just want to live alone and away from everyone; yet I’m polite in civilization and I don’t pretend I’m Les Stroud and could survive for years in the woods as some hardcore paramilitary guerilla.
You know, as a 57 year old TRT takin’, 50k dollar fifth wheel RV campin’, 30% body fat havin’,
metformin prescription swallowin’, “coulda served as a Delta Force Operator but I’d have slapped the Drill Instructor the first time he yelled at me” lifelong accountant.
Trucker/NBay,
Those guys sound like they suck. I think I know who sucks harder, though: people from Central PA. Lots of people with AWMS up there.
Angry White Man Syndrome. (Dave Chappell, I think?). I suffer a bit of that now and then, but I’ve never let it take hold. Never put nuts on a truck. Never jacked one up, either.
Once, in Moab, looking at a hotel parking lot full of weird cars, I said what should be some kind of…wise thing that people repeat: “America, where you can be whoever you want to be. Too bad so many people just want to be assholes” (or something like that…it was probably more eloquent at the time…)
“straight piped turbo diesel”
TG,
I don’t get that either. And I’d guess most of those exhaust mods are cosmetic – the truck is louder but not making much more power vs stock.
Muss,
Just WHO is the “you” that can be whoever he wants to be?
Anyway, no way in hell there is a “wise” quote anywhere in there, IMHO.
Speaking of Moab, I got arrested at Thompson’s corners in 59 VW about ’71, after almost dying heading over those N-S Mtn range in a bad winter. Had one red and a (found out later) vitamin suspected to be acid. Guy who owned cafe/gas station there took off apron and went into Magistrate’s office with the cop who stopped me, said I was weaving, asked if he could search for firearms, found pills in door pocket (I didn’t even know they were there…separated from wife and heading to Uncles 15 mi outside of Newcastle to read and chill.)
Anyway, he (they) wanted $25 cash or they’d send me to County “where they don’t distinguish between 1 pill and 1000”. Then gave me lecture on how people think they are hicks, but “Every type of person in the world comes through there”. Was traveling on 76 gas credit card, no money, scared shitless, almost cried, promised to have the money on way back and they let me go. Made a bit of money from day jobs at Glenwood springs un place, gave them $10 on way back month later (after LOONG mental debate) and promised to send rest, never did. Was a big deal to me, nothing to them….or anyone here.
Drove bobtail PT a while…but “never changed lugs” either…the point….. but fan belt broke on 280 headed for Saratoga Safeway (load of shelving)…another story.
Oh, Trucker,
The Glenwood Springs un office sent me to a fancy Aspen restaurant to interview for a waiter job (was good looking kid) but figured out I’d tell the first rich a-hole who gave me shit to fuck off…wouldn’t have slapped him like you would the drill sergeant…in fact I stayed away or kissed their ass when unavoidable.
Shows we are all different, yes?
That’s an interesting point of view that is different than mine but comes to the same conclusion. I’m ready to downsize.
When I grew up in America we all lived in the same house, post WW2.
It was a post GI neighborhood in which America was grateful and proud of their victories in both the European and the Pacific theaters.
History, irrelevant to the present.
Some characterize as dystopian
I think the dream is a little more nuanced. Part of the dream I am sure is also not having to have both adults working full time jobs and spending money on full time day care and wondering what happens if one of them loses their job or if somebody gets sick with medical bills. America, at one time fought for quality of life and the working class had real labor movements. Hopefully that spirit will return as don’t see the ruling class and wealthy corporations just enabling that. The next couple of decades could be very interesting. Deficits can only fund growth for so long but clearly not in any measurable or predictable time frame.
Tic tic boom
Great info, thanks Wolf.
I’ve passed on nearly every multifamily deal for funding in the last 5 years. Numbers just didn’t work. Even before the interest rate hikes. Folks have been way overpaying for used and new multifamily since 2018. Land costs have been at historical highs so this has prompted builders to go for density to maximize profits.
New construction, private money lenders have struggled to get paid off the past 2.5 years after funding the construction of multifamily projects.
Projects got completed after rates went up and couldn’t find a long term refinance. But still plenty of buyers looking for a place to park their dumb money and pray for appreciation. And no shortage of Realtors peddling overpriced, 4 cap (lol ;) multifamily, apartment complexes.
I wonder how much of the single family construction are BTR investors?
Build to rent (BTR) has been growing very rapidly and is approaching 100,000 starts in 2024. In Q3 alone, it was already at 24,000 (+40% yoy). Q4 figure not yet circulating. So maybe 9% of total single-family starts in 2024.
The big single-family landlords have all been slowly selling their scattered individual houses, of which they bought 10s of thousands in 2011-2015, and that are really hard to manage, and that are very profitable to sell now, and they’re slowly switching to BTR. It makes total sense slowly selling those scattered houses (big capital gains, cost reductions) and shifting to BTR.
BTR developments are nice. They’re marketed to renters with well-above median incomes — these renters of choice — who’d rather rent than buy at these prices, and save a lot of money on a monthly basis. The earnings calls of these landlords and homebuilders are really interesting.
If prices stay high, then rentals directed at the middle class like what you’ve described is where housing is headed I believe. A society of renters. Maybe we can call it post modern feudalism?!
Housing should’ve always been a liability. It’s only in the last 10 or so years where it’s been seen as an investment or almost a right. Housing as an investment also made housing prices increase so much during that time period too.
Let’s get back to seeing housing as a liability and not demonize not owning a home.
1stTDinvestor,
That’s just total BS. Feudalism my @ss. It’s called freedom of choice. People who could buy but don’t want to buy because prices are too high and buying is a bad deal at those prices, make a rational economic decision. They have a choice, and they’re choosing. And people who want to sell a house don’t have those people to sell to.
Also, in your benightedness, you didn’t read the other part that I wrote in my comment. So here it is again in bold:
The big single-family landlords have all been slowly selling their scattered individual houses, of which they bought 10s of thousands in 2011-2015, and that are really hard to manage, and that are very profitable to sell now, and they’re slowly switching to BTR.
They’re not increasing their portfolio of rentals, they sell their vacant houses to regular people, and sometimes even to their tenants, and they’re building houses to rent and they’re shifting their portfolio slowly to rental. So they’re actually contributing to supply of houses for sale.
Somes I miss renting. Having a landlord mow the lawn and fix all the stuff that breaks is kinda nice. I have to mow my own lawn and fix my own stuff.
As I’ve posted before, 2-4 unit complexes are at least 20% overvalued. Everywhere. California, the Midwest, Florida.
Last complex I bought was 2020, and it was a special one—fixer, I negotiated a large discount (30%) and got a 3.25% FRM for 30 years. It’s quite profitable, but in the years since, financing has only gone up and prices are the same or higher than 2020. Never mind T&I and repairs.
@David the reason that “2-4 unit complexes are at least 20% overvalued” is that a huge number of them are purchased by “owner users” who value them differently than an “investor” values most bigger multifamily deals (the guys buying most 2-4 unit deals living in one of the units are not paying for management or maintenance since they are doing it themselves).
Maybe; oversupply will lead to construction slowdown, which will lead to the layoffs, which will lead to recession, which leads to drop in inflation.
IDK. With the advent of tariffs prices may not come down. What seems equally possible is a recession with no deflation. (stagflation?)
My main concern is blowing out the deficit with tax cuts and the return of the “bond vigilantes”. Still skeptical that DOGE will be able to accomplish anything, being that it has no real power.
Only “skeptical”, huh?…..
…Think the Gulf will be different with a new name? I’m a bit skeptical about that.
Many uncertainties, it seems…….
The market is behaving as one would expect. Prices of single family homes is still sky-high so builders are still building. In the multifamily space there is a dearth of affordable duplex to quadplex type buildings (think townhouses and patio homes) so builders are into those as well. Finally, there is a huge glut of large apartment complexes thanks to massive overbuilding in the past 3-4 years, mostly in the sunbelt so that market is dead right now.
In my hot Southeastern market, rents at the large corporate apartment complexes is down about 25% from the peak, with some complexes hoping to keep advertised rents high by offering incentives like 2 months free to new tenants. Home prices on the other hand are only down by about 5% from the peak and some of that may be seasonal. For sale inventory is up about 300% from the pandemic low. Existing homes are staying on market for a while (especially if not priced well, which many are) although new homes seem to be selling briskly.
The gist of it is that rents and builder behavior – which move more quickly to market conditions are adjusting. The big question is how long can home prices stay this high in the face of all the headwinds.
@Max Power (and others) I don’t want to know what town or street you live on but it is nice when posting market info to be a little mose specific than “In my hot Southeastern market”. It would be nice to add the name of the largest big city or the MSA. I own property on the SF Peninsula and the Sacramento area and both markets are very different so saying “West of the Rockies” every time I posted about rents or vacancy rates is not that helpful to anyone.
He lives in Alabama. It is hot, but nobody wants to live there.
Out here in flyover existing home sales are slow with prices falling.
My spring backlog for new construction is down from the great plague escape.
Land…not small lots…still moving with prices still going up.
Wolf you should invest into $TRUMP coin
How is buying utterly worthless junk in any way an investment?
No way!
Oh yessss – perfect for investment one day before the inauguration – well at least for He Who Now Has $25 BILLION of such coin. /s
Caught a bit of left wing TV that said it’s a much more convenient way for rich people (especially overseas) to garner favor with him than spending a lot of $$$ at one of his hotels, like the one in DC, or whatever else he gets profit from. Just buy a lot of his coin. Think they said he even has a Melania coin. Called it “meme coin” for some reason…..not even an algorithm backing it up?
Made some sense to me, but I’m a Bernie type coastal snowflake….not totally “woke”, though……I pick and choose (or am unsure about) many of those issues…..no straight party line.
Bring on the supply, sure, but it seems like it will never be enough to satisfy the artificially induced demand from the fed’s low rates.
Toronto condo pre-construction prices fall 15 % from 2023 levels.
If sales continue at this rate it will take 5 years to clear inventory.
Globe & Mail, Jan 17
To complete the picture, new home sales data is needed to know if their is a glut or not… from my brief research it looks like new home sales are down to 2020 levels, meaning prices are too high, shunting people to the multi family market?
1. “To complete the picture, new home sales data is needed to know if their is a glut or not”
All you have to do is CLICK ON THE LINK IN THE ARTICLE AND YOU WILL GET TO THE ARTICLE ABOUT NEW HOME SALES AND INVENTORIES.
But since you’re too lazy to do this, and since you don’t read the articles here, here is the link AGAIN. So CLICK ON IT and RTGDFA:
https://wolfstreet.com/2024/12/23/glut-of-new-completed-single-family-houses-for-sale-spikes-to-highest-since-2007-prices-drop-to-lowest-since-2021-still-way-too-high/
2. “from my brief research it looks like new home sales are down to 2020 levels, meaning prices are too high, shunting people to the multi family market?”
Pile of BS. 2020 was a HUGE year for new home sales. And 2024 was better than 2023 and 2022, and all years between 2007 and 2020. And here is one of the charts in the article that you were too lazy to read:
Interesting facts inventory is rising for sure im guessing the locale is Florida Texas and Georgia a new custom was framed today on my street in Tyler Texas also there are build to rent homes ongoing plus many new home starts in Tyler a town of about 120 thousand with a metroplex about 200k
What am I missing ? More housing into a saturated market from the perspective of sellers completely disconnected from their yang, the perspective buyers. I suggest that a great chasm exists between the two magnets, centered around price, that is not explained by the epistemology of popular economic equilibrium rostrums.
However, in the long run, I do believe the market will equilibrate in a manner that puts the cost on the least able too afford it. Their legal representation is easily overwhelmed by the concentrated wealth deciding such matters.
Here in northern NV 3/2 1400 sf home purchased 3/8/24 for 325,000 flipped under contract 1/18/24. 499,000
The home was on the market for five days.
under contract 1/18/24 for $499k
purchased 3/8/24 for $325k
???
Touchdown ! But it is not representative of the affordability for the median family when the interest burden doubled, ie the payment while the asking price stayed the same.
No, hombre. That is not a typical transaction, which makes me wonder about the underlying purchase motivations of the buyers.
In NYC, you can purchase a 6 unit multi family rent stabilized building for the same if not less the cost of a two family house.
Theory: developers are front-loading all the inventory they can before all their labor gets deported.
You think housing is costly now, wait til it has to be built by slow-moving, $80/hr domestic labor.
While there are challenges such as high financing costs and economic uncertainties due to potential policy changes with a new presidential administration, the overall outlook for single-family construction remains positive.
I think, builders are expected to continue responding to the ongoing housing supply issues, with forecasts suggesting slight gains in single-family home building as conditions stabilize