There may be a construction boom, but builders still have a lot of ground to make up from a decade of underbuilding, according to a new report from Zillow. Builder efforts are hampered by continued supply chain disruptions and labor shortages.
When comparing new construction to population growth, nationally, construction has fallen short of 1.35 million units since the Great Recession in 35 of the largest U.S. markets. That would be the equivalent of no new homes being built in the respective markets for 2.7 years.
The implications are seen across the country, as home prices continue to rise and limited inventory drives price growth. Single-family home appreciation has grown more than any other type of home, having risen 47.9% since January 2008, the report found.
“Builders in recent months have put the pedal to the metal to get new homes up and meet a rush of demand, and we just saw the first full year of above-average construction since the mid-2000s housing crash,” Zillow senior economist Jeff Tucker said in a press release. “This isn’t a new boom cycle of new construction so much as it’s an attempt to get even from the last bust. There is still a long way to go to catch up from more than a decade of slow construction, and some markets have longer to go than others.”
Seattle had a shortfall of 113,292 homes, which is equivalent to the number of residential building permits that would have been issued if home-building kept up with the rate of population growth between 1985 and 2000, Zillow found.
The implications of this shortfall are being felt today as home prices rise across the country. A limited supply of homes has caused a surge in demand that’s driving the rapid price of home growth seen throughout the pandemic.
Seattle home prices are up 73.9% from the 2007 housing crash. October’s typical home value was $695,058.