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Builders Have Focused On Apartment Construction Since The Recession

Aug. 17, 2017

In the 40 years prior to last decade’s housing bust, 71 percent of new home construction was of single-family properties. Since then, the share has dropped to 67 percent, a swing a 3.1 million homes.

HomeUnion reports that apartment construction is expected to peak this year. Though total permits and completions are up, housing starts are down on both a monthly and yearly basis. The thinking is that demand for new multifamily units has failed to keep pace with supply.

As the economy moves into a period of prosperity and interest rates begin to rise, a sufficient runway for builders to correct this imbalance during the current cycle unlikely exists. A sizable price gap exists between new and existing homes, and most new homes that are affordable for first-time buyers are located in distant suburbs.

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