Here are some great national housing stats and I am watching these too to see how Denver compares with trends nationally.
· Zonda reported that their first quarter New Home Lot Supply Index dropped 20% from a year earlier down to 38.6. 100 reflects “perfect equilibrium” in the market; whereas a score of 75 reflects a “significantly undersupplied” market. They didn’t say what a score of 38 means, but I thinking “holy shit Houston we have a problem.” This means that the hope of builders building more homes quickly is a “pipe dream”.
· Housing starts in April were down 0.2% from March to an annualized pace of 1.724 million; but SFR starts were down 7.3% from March.
· Year over year starts were up 14.6% from last April with multi-family permits up 40% and SFR permits up only 3.7%.
· Permits were down 3.2% from March to an annualized pace of 1.819 million. SFR permits were down 4.6% from March.
· Year over year permits for SFR were down 3.6% and multi-family were up 16%.
· SFR units completed were down 5% from March. This is probably why permits and starts were down. Why permit or start a new home when you have homes that are not completed yet?
How many new housing units need to be built yearly? About 1.5 million for the new households formed and the number of destroyed homes every year. But I think this number will start to rise as we have over 4 million adults turning 22 every year for the next 11 years. Why is 22 important? That’s when half of them graduate from college and rent their first apartment possibly. Thus, we may need 1.75 million new units built every year for the 11 years to keep pace with this expected household growth.
Last year was the first year that starts exceeded 1.5 million since 2006 and hopefully this year will be the second year. From 2009 to 2021 builders and developers started 14.96 million new housing units (apartments and SFR) combined. We needed them to build 19.5 million new housing units (1.5 million x 13 years). Thus, we have a housing shortage nationally of about 4.5 million housing units.
