Construction of new single-family homes has yet to recover to normal following the Great Recession, according to a new a Zillow survey, which expects construction shortages to continue until at least 2022.
The survey, commissioned by both Zillow and Pulsenomics, found that a majority of economists and real estate experts foresee new single-family construction to remain under a 1 million-unit pace for the foreseeable future.
The survey polled more than 100 economists, investment strategists, and real estate experts for their predictions of the U.S. housing market.
Zillow states that single-family housing starts have averaged more than 1 million units a month, and reached its peak of more than 1.8 million in 2006 before falling during the Great Recession.
While most see 2022 as the cutoff point for construction shortgages to end, some surveyed push this off until 2029. One in five surveyed believed 1 million units will be reached by the end of the year, and a quarter are targeting 2021.
"The American housing landscape was shaped in a big way by the drive for the classic American dream; swaths of cities were set aside solely for single-family, detached homes, with big minimum lot sizes and slow local review processes. Jump ahead three decades and housing affordability is a major issue across the country," said Zillow Director of Economic Research Skylar Olsen. "Those same practices now arguably limit the ability of the next generation to become homeowners. Without new homes to meet population growth and replace an aging housing stock, home buying is expected to move further out of reach.
“The most-popular solutions among experts all ultimately suggest rolling back these rules to increase flexibility and get more projects through the process faster."
Also, Zillow states that the builders’ eagerness to increase activity is tied to future home value growth. Those surveyed have lowered growth projections over the past year, as they anticipate home values to grow 3.6% in 2019, then slow to 2.5% in 2020. Home values are expected to continue falling in 2021 to 2.2%.