New Housing Construction Starts to Slow

2016 was a year many people wanted to leave in the past, but the effects could very well follow us into 2017. Balboa Realty are the experts in Orange County Property Management and here to fill you in on all of the important info to start the new year off right.

As the year came to a close, there was a huge lull for homes under construction. Not only was there a shortage of homes on the market at the end of 2016, but there is also currently a low number of permits for future homes to be built. The United States Commerce Department reported this amount is down 10.4% from October to November 2016. Permits are the most accurate way to determine the outlook for the number of houses that will be on the market in 2017. 

Because there has been a lack of growth of new construction there is a heightened demand for homes to rent and buy. When a situation occurs of high demand and low supply, the prices ultimately go up. Also, when multiple people want to buy the same property this creates bidding wars and the selling price becomes higher than the asking price.

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The Wintertime season is one of the contributing reasons for the slowing construction. Many people are preoccupied with preparing for and celebrating the holidays and the colder winter weather makes construction slower and harder. Another factor was the controversial presidential election. It created an immense amount of uncertainty and many people didn't want to make risky financial decisions before knowing where the real estate market and country was headed. Spring is the hot season for buying a home and all of the current data indicates that there will fewer homes than ever. This isn't all bad news because the market could make a turn around and the new year could bring more permits, construction, and homes for sale. More good news shows that builder confidence is at the highest level since 2005 and although buyers may have to be patient, don't worry too much.

Published on Friday, January 6, 2017