The annual International Builders’ Show was held by the National Association of Home Builders in Orlando, FL, this week.
US Housing Market: 2017 Forecast
At the annual International Builders’ Show was held by the National Association of Home Builders in Orlando, FL, this week, attendees were told almost 50,000 apartments are being built in North Texas, according to the Dallas News Thursday.
And nationwide, developers got permits to start an estimated 383,000 multifamily housing units in 2016.
Still, after a half-dozen years of rising construction, the apartment building binge shows signs of flattening in 2017, top housing economists say.
MULTI-FAMILY BUILDING STARTS WILL SLOW
The much-higher-than-historical average multi-family housing starts of the past few years will finally be easing off.
Multifamily home starts — 90 per cent of which are apartments — dipped by a hair in 2016, according to the Washington, D.C.-based builders trade association.
And the forecast for 2017 and 2018 is for flat to slightly declining apartment starts.
Apartment construction around the country remains very high — more than three times the starts the industry saw at the worst of the recession in 2009.
Texas has been the top US apartment building market the past few years;
“
We’ve been averaging almost 400,000 starts in 2016. Things are probably going to drift down. We think production will be between 350,000 and 375,000 units annually, and that is probably more sustainable.”
– Robert Denk, forecaster for the National Association of Home Builders
BUILDERS’ ASSOCIATION MULTI-UNIT CONSTRUCTION FORECAST
Builders’ association economists predict that the cities that have had the biggest run-up in apartment building will see some of the most substantial declines in the coming years.
Texas multifamily construction in 2016 was about 160 per cent of what is considered an average production year, builders say.
Labour Issues
Steve Lawson, a top officer in the Texas builders’ multi-family council, said rising construction costs, higher interest rates on development loans and labor short- ages are hurting apartment builders.
“The incoming administration’s immigration policy is likely to be inflationary for the labor market as well,” he said.
Builders in many parts of the country — particularly in Texas — have relied heavily on immigrant labour.
US Housing Market: 2017 Forecast
Fuelled by a growing economy, solid employment gains and rising household formations, single-family production will continue on a gradual, upward trajectory in 2017, according to economists speaking at the International Builders’ Show in Orlando, FL, this week.
US HOUSE PRICES
National Association of Home Builders Chief Economist Robert Dietz said 64 per cent of builders nationwide re- port low or very-low lot supplies; the rate of unfilled jobs in the construction sector is now higher than the building boom; and that acquisition, development and construction loans for builders – while on the rise — needs to grow fast- er to meet demand.
However, these supply-side challenges are more than off- set by continued economic growth, ongoing job creation,
rising wages and favourable demographics. Moreover, builder confidence is up on anticipation that the in- coming Trump administration will help to lower regulatory costs going forward.
But in a sign that more millennials are getting off the sidelines and jumping into the market, Dietz noted that townhome construction, which can be a useful bridge for millennials to transition to homeownership, is showing impressive growth and now constitutes 12 per cent of all single-family starts.