The Stunningly Simple Math of the US Housing Market
...again, taken from Professor Peter Linneman's talk at my ULI multi-family council meeting last week.
Every year, the US needs about 2 million new homes. 1.3 million to house the 3 million new people who call the US home, 100,000 second homes for these people, and roughly 600,000 homes to replace demolished or obsolete housing stock.
Against this demand, our housing industry produces anywhere from 1.4 million to 2.4 million homes.
Today, there are about 600,000 homes held in inventory--about a six month supply. Builders hold 300,000 nationwide, the other 300,000 are being held by investors/speculators. The surplus of 300,000 should work itself out--either by sale, or by investors handing the keys back to the bank--by 2008.
Some markets are so supply constrained, so in demand, that recovery is upon us. To wit: