Migration vs. New Construction - Is your investment area on the way up or down?
Is there a housing shortage or an abundance of housing in your investment area?
"Is my city experiencing a housing shortage or an abundance of housing?" This is the most common question I get from real estate investors across the country.
Why is this such a common question? Let's start with a few simple settings:
Housing shortage: Not enough new homes / apartments are being built to meet the demand of people moving to the city. Rents, values and real estate yields rise as a result.
Plenty of housing: Too many new homes / apartments are being built relative to the demand in the city. Rent, value and real estate yields fall as a result.
Understanding where a city falls on the spectrum of an abundance of housing shortages to housing will allow a real estate investor or apartment buyer to make more informed decisions about when and where to buy.
We use data analysis to identify the cities that are in housing shortage.
For example in Phoenix Arizona:
As early as 2005, Phoenix approved more than 60,000 new housing units a year, a clear sign of housing abundance. Shortly thereafter, average home values in Phoenix fell 50 percent, from 270 to 135. Many real estate owners and investors have been wiped out. The consequences of buying Hausing Glut for these investors have been severe.
However, since the early 2010s, Phoenix has allowed far fewer new housing units. At the same time, the population and migration to Phoenix increased. The result is rent and strong value growth, which provides real estate investors with excellent returns. The foundations of the Phoenix housing market are much stronger today than they were 15 years ago.
Understanding these dynamics is integral for real estate investors who want to make informed investment decisions.
Where is everyone going? What are the current directions of immigration in the United States?
Where is everyone moving to? Understanding this figure will have a major impact on the U.S. housing market by 2022 (and on the potential for the housing bubble / crash).
Data from the U.S. Census Bureau show major changes in the places where Americans moved and in the housing markets that accumulated the most people during the plague.
Data from the U.S. Bureau of Population Bureau data show that from July 2020 to June 2021 there was a big wave in migration to the solar belt in America. Real estate markets like Phoenix, Dallas and Tampa have amassed the most people in nominal terms.
Meanwhile - housing markets like Myrtle Beach, SC, Sarasota, Florida, Cape Coral, Florida and Boyce, ID has gained the most new residents in percentages. This huge influx of people could be the reason real estate in these metros is booming (and could be a big housing bubble).
Winners of Strong Immigration Inside:
Boys, Idaho
Cape Coral, Florida
Sarasota, Florida
Myrtle Beach, Syracuse
Knoxville, Tennessee
Austin, Texas
The stars of negative immigration:
New York, New York
San Francisco, California
San Jose, California
Los Angeles, California
Honolulu, Hawaii
Chicago, Illinois
The ten markets where home inventory is going to explode
10 cities where inventory is about to explode! Homebuilders are doing their best to bring down the US housing markets by 2022.
The US is a huge housing bubble in early 2022. Apartment prices have never been higher while inventory has never been lower. But fortunately homebuilders across the U.S. real estate market are coming to the rescue: 1.5 million homes are currently under construction in the U.S. housing market, the highest level in nearly 50 years according to the U.S. Census Bureau.
These are the ten cities where house construction is at its peak. Homebuyers and real estate investors in these cities will love the fact that so many homes and apartments are currently under construction.
10. Denver, Colorado
U.S. Census data show a 50% increase in building permits from 2020 to 2021 in the Denver housing market, one of the highest in America. More than 6,000 detached houses were allowed in the second half of 2021, a potential increase of 300% over the existing inventory level according to Realtor.com.
9. Dallas, Texas
The Dallas-Fort Worth subway is building more homes and apartments than anywhere else in America. There were more than 72,000 approvals issued in 2021 by home and apartment developers, a record high. They sure love to build throughout the real estate market in Texas.
8. Charlotte, North Carolina
Another housing market they love to build is Charlotte! Nearly 30,000 permits were issued in 2021, higher than levels in the mid-2000s at the height of the previous housing bubble. This is a big warning sign for buyers of apartments in Charlotte: is a housing collapse coming?
7. Salt Lake City, Utah
Salt Lake City, alongside neighboring Metro like Ogden and Provo, is building a record number of new housing stocks. During the last 6 months of 2021, 2,100 permits were issued for detached houses, while there were 600 houses active in the market. Potential increase of 355%.
6. Fayetteville, Arkansas
Fightville, and northwest Arkansas more generally, has the potential to be the next Austin, Texas in the next decade. But in the short term there can be some problems. Nearly 80% of all allowable homes in Fateville are single-family homes and there has been a large increase in recent years.
5. Nashville, Tennessee
Nashville is the rare housing market built significantly more than in the mid-2000s. In 2021, homebuilders in Nashville allowed 31 new housing units. The previous peak in the 2006 bubble was 16k. The recent housing accident did not hit Nashville so hard. But maybe it will be.
4. Sarasota, Florida
A hot destination for retirees and second home buyers, Sarasota is once again a hot area for new development. Nearly 16 housing units were allowed in 2021, with a potential increase of 427% compared to active inventory levels.
3. Austin, Texas
Undoubtedly the largest housing bubble in U.S. history. And this may be one of the biggest housing crashes in the future. Austin's real estate market is about to be hit by a new inventory that has never been seen before in its history.
2. Huntsville, Alabama
Huntsville is a housing market that I love in the long run, say in the next 5-10 years. But in the short term great softness may form because of the degree of aggressiveness of home builders. Huntsville is now building more than it built in the mid-2000s (bubble warning).
1. Rally, North Carolina
Rally (including areas like Curry) was also a major market for home construction. But things have really gone up in gear in the last year. In the last 6 months, homebuilders have allowed 6,600 detached houses while active inventory levels are only 1,100. This means that Rally may face a 600% increase in inventory if all the homes under construction go on the market.
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