Housing markets that have had some
of the biggest rebound in home prices are seeing some of the biggest
shortfalls in construction activity, a new report shows.
Rebounding markets such as Las Vegas, Sacramento, Calif.,
Riverside-San Bernardino, Calif., and Warren-Troy-Farmington
Hills/Detroit, Mich., are seeing asking prices soar more than 20
percent. Yet construction activity is less than half its normal level in
those places, a new report by Trulia shows.
Investors and builders have bet on different housing markets in the
recovery, says Jed Kolko, Trulia’s chief economist. Investors have
mostly focused on snatching up properties in markets that saw home
prices fall by some of the largest numbers during the housing crisis,
whereas builders have bet on markets that avoided the worst of the
housing crisis and where job growth has remained strong, like in Texas.
The report follows on the heels of another report out this week by the National Association of Home Builders that
shows builders facing a shortage of buildable lots in some of the most
booming markets. The shortage of lots is leading to a rapid rise in
prices for the limited supply of lots that are available. The average
price of a finished lot ready for building was up 40 percent in the
second quarter compared to a year ago. Those rising costs ultimately are
expected to be passed along to buyers of new-homes.
Source: “Booming markets see lag in construction activity,” HousingWire (Sept. 5, 2013)