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The Market Needs More New Affordable Homes

By Brian Kline | June 20, 2016

Across much of the country, home prices keep jumping and price wars are happening. Most people would think that would be a major incentive for new home construction. However, new construction is decreasing according to the U.S. Department of Commerce. Across the country, the number of newly built homes fell to only 72,600 in April. This is down 5.8 percent from last year.

It probably isn't enough but the number of houses under construction in April (999,300 annual) is up compared to March. But still, the number is not relieving the shortage of houses for sale across the country. Houses that do come on the market are going to continue selling fast and prices are almost certain to continue going up. That's bad news for first time homebuyers.


There continues to be a shortage of rental homes and permits for new construction of apartment buildings are down. Overall, the housing affordability and availability is less than is needed. The development of Wall Street investors buying up rental properties does not seem to be proving beneficial. Most rental buildings that are under construction tend to be luxury buildings making it more difficult for low end renters to find somewhere to live. Both rents and home prices keeping going up.

Where most housing growth is occurring is in the south with the west taking second place. The cold northeast and midwest are seeing people move away. The northeast has half of the new building permits (8,600) as the south does. The south had 48,800 new building permits in April and the west was a distant second with 23,600 new permits.

Most of the unaffordable housing is happening in the major cities of New York, Los Angels, Seattle, and especially San Francisco. In these metropolises, developers are tearing down old homes to create space to build new ones. Part of the on-going problem is the new ones are too expensive for most families.

Modern technology keeps adding to the cost of new homes. Thermostats that you can adjust from your smart phone and high-end plug ins for your electric car are only adding to the cost of new homes. According to the U.S. Census Bureau, even after being adjusted for inflation, housing affordability has almost quadrupled since the first housing survey was taken in 1940. There is plenty of social and government emphasis on making a college education available to more young people but even a higher education doesn't mean they can afford to buy a home.

Please leave a comment if this article was helpful or if you have a question.

BioAuthor bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for seven years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. In the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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