U.S. New Home Construction Expected to Fall 300,000 Units Short of Demand This Year, More Pressure for Home-starved Markets Like Denver
Source: Joe Rubino of the Denver Post
The National Association of Home Builders forecast new construction at 909,000 homes in the U.S. — a whopping 300,000 homes short of their projected demand, based on data gathered from Redfin. In Denver, median home prices have been hovering around $500K, with homes still flying off the market soon after being listed. Labeling Denver as a “seller’s market” in today’s environment is quite the understatement.
The biggest factors behind the housing shortage:
The cost of lumbar has risen 62% since the start of last year. Why? Tariffs on Canadian softwood lumber have driven the costs of new construction up by roughly $9,000.
Another factor behind the supply/demand gap are local regulations, such as the banning of slot-homes in Denver. These types of structures previously allowed developers to maximize the number of units on a lot by turning them sideways.
People, especially Millennials, love Denver. And they’re coming here in droves. Although there are signs that Denver’s popularity is waning, is it enough to ease the demand and close the gap in the housing shortage?
In the meantime, developers are focusing on attached developments, namely town homes. Last August in Denver, around 30% of new residential construction on the market were attached homes. With a changing demographic, economic, and regulatory environment in Denver, it appears that town homes and new urbanism will increasingly become the norm.
Source: Jon Murray of the Denver Post
Denver City Council unanimously approved zoning code changes preventing future development of sideways facing slot homes. The change has been a long time coming for some Denver residents but it will only affect future building permit approvals. There are several projects still in the pipeline that will be grandfathered in before the new zoning takes place. The change would require new developments to orient the building toward the street connecting it to the neighborhood better. Berkley, Jefferson Park, and West Colfax have the highest concentration of slot homes in Denver. They say a picture is worth a thousand words, in this article there are great before and after satellite views showing how the neighborhood has changed.