In just three months, a glut of new construction is taking over the West.
With prices soaring and demand for new homes outstripping supply, the U.S. real estate market is in a tailspin.
Here are three factors behind the boom: A rush to build A glut of construction in the past few years has been one of the main drivers behind the current economic downturn, but that glut could be backfiring on us if we don’t manage to get rid of the current trend of building.
According to research firm NPD Group, there’s been a surge in the number of new homes being built in the last three months of 2017.
Since October, construction has jumped almost 40 percent, and construction costs are expected to surge another 35 percent in 2018.
“If we continue to build as fast as we are now, we’re going to be creating more homes than we’re actually building,” said Steven Cohen, NPD’s senior vice president for home sales.
“That’s not going to do us any good.
We’re going get into a housing crunch in a few years.”
There are a couple of reasons why this boom could be coming to an end.
First, new construction isn’t going to pay the mortgage.
If you’re looking to build a new home, you should be looking to do it within your income range, said Peter Crampton, the director of research for Zillow.
“There are only so many houses you can build in your neighborhood and you need to be able to cover the mortgage,” he said.
“You’re going be investing more money into your home if you build a lot of new ones than if you sell it.”
The other reason for this boom is the lack of demand.
“I don’t think we have the demand that’s out there yet,” said Ben Cohen, chief executive officer of the real estate website Trulia.
“But I do think we will.
We have more inventory on the market, and if we get more of that inventory we can build more homes.”
What you need help with: The shortage of new houses is also affecting demand.
According the NPD report, demand for single-family homes in the U