To accommodate current and future demand this decade, the home building industry must build back from a deficit of 17.1 million housing units, but according to John Burns Real Estate Consulting, the industry’s efforts must first be concentrated on the most undersupplied regional markets. The nation’s five most undersupplied markets—based on current vacancy rates lower than their historical norms—include Riverside-San Bernardino, Calif., West Palm Beach, Fla., Tampa, Fla., Phoenix, and Fort Worth, Texas.
Not only are the popular markets such as Riverside predominantly undersupplied, but they’re also seeing softening rents and declining home prices amid an ongoing market correction leading to a nationwide slowdown in home sales.
Until recently, builders were very much on pace to build what was needed, starting 1.71 million homes in 2021 and 1.65 million homes in 2022. Due to the current affordability crisis, they will fall far short this year, although they will finish many of those homes and offer them for sale or for rent sometime in 2023.
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