Here is the history of new one-family home sales in a nutshell:
Over the past 60 years, new one-family homes have been built and sold at an average rate of 2,500 per million population. We exceeded that average by a cumulative 2.8 million homes during the boom of 1995-2006, and then lagged it by 4.0 million homes during the bust of 2007-2019.
And we're still below average. Even during the 2020-21 boom we only slightly exceeded it for a grand total of six months before falling below again.
Good chart. Conveys a lot of information.
And what happened around 2005 to drive home sales off a cliff into a decades-long plunge it has yet to recover from?
That's when the NIMBYs took over!
Just kidding, but that would be a logical conclusion if you listen to most pro-housing advocates on Twitter & elsewhere. You'd think there's no such thing as a market, only aging homeowners fighting growth to protect their home value and their view.
Maybe the burst of the housing bubble and the aftermath of the GFC had something to do with it?
The graph shows home *sales* not new construction starts. And it's sales for detached dwellings, not apartments, condos, or townhomes. What the NIMBYers generally prevent is the building of denser, more affordable multi-family dwellings.
Data on multi-unit completions show a falloff after the GFC too, then a recovery.
https://alfred.stlouisfed.org/series?seid=COMPU5MUSA
(click Max)
Longer-term, completions are doing better now than the early 2000s, but are still well off the highs of the '70s and '80s. Why is that? NIMBYs?
I'd say it's probably demographics. Millennials are now where boomers were decades ago, and I'd expect the recovery to extend to the '20s and '30s.
The Market > NIMBYs.
I think it’s high time for another one of Kevin’s patented “the millennials don’t have it so rough compared to previous generations” posts.
Wait. 2007 was a bust year? The year before 2008? The peak of the subprime mortgage derivatives?
One problem with this graph is that it does not take into account the increasing (in some locations, quite a lot) number of single family homes that are rentals. As I recall, 2008 was when wall street started buying them en-mass, and not as REITS even, but in a hedge fund structure. Also there has supposedly been a gradual increase over the years in properties bought simply as a store of wealth without intention of living in or renting, especially on the coasts. Besides all that some single family homes are not primary residences, but "vacation" properties, which also have different buying/selling patterns.
It seems like the available housing stock shouldn't matter whether it is rental or primary resident owned, but certainly it messes with historical patterns of buying and selling.
I'm not sure how to determine whether a house is a rental or not--the ownership should be public record, but that doesn't indicate if the owner is an individual renting it out.
This explains why it has been harder to buy a house. It was relatively easy to buy a house during the boom. The mortgage people were desperate to find borrowers to populate the tranches of their complex derivative financial instruments. Hence the liar loans, zero down loans and every other variant. It didn't matter if they generated cash flow. The ratings agencies were more than glad to certify the packages as excellent, and there was lots of money to be made.
After the bust, banks got a lot more cautious. The fact that so many people were broke and it was going to take time for house prices to find post-boom market values meant fewer buyers and even fewer builders. Integrate the area between the mean line and the curve. The area during the boom is smaller than the area during the bust. That means a deficit of homes.