Economists have recently pointed out that residential builders are transitioning from rental apartment projects to single-family residential projects. This change is substantiated by the increase in single-family homes built, which comprised two-thirds of all the residential building projects in 2015. Forecasts from the National Association of Home Builders and housing-research firms such as Metrostudy are predicting an increase of more than 14% of single-family building projects, with only a low 2-5% growth in multi-family building projects throughout 2016.
Rise of Single-Family Homes
How will the industry continue to test these predictions? Enter the US Census Bureau’s construction spending reports. Industry regulars believe the data included in these reports should provide a solid indicator of whether residential building projects are swinging out of the rental market and into single-family market inventories for sale. A notable Census Bureau data point > 6 years of consistent rental rate increases in the United States drove many potential renters from the market, as disposable income during the same time period did not realize similar growth.
Although such increases in single-family building projects can drive home prices lower, subsequently having a negative correlation on rent can force potential homebuyers to miss out on purchasing a home during what might be an oncoming construction boom. The cause for this possible road block: homeownership is still subject to properly navigating (i) stringent lending standards and requirements, (ii) potential management of the borrower’s student loan(s) and (iii) time required for an upswing of residential inventory to enter their market and drive prices down.
Looking forward, Nevadans should keep in touch with their local realtor and broker and stay informed on options relating to rental properties and potential homeownership. In keeping this relationship strong, residents will have greater insight to capitalize on their real estate transactions throughout 2016. At Schwartz Realty, we have the agents and market insight to help you identify the right time to sell your home, or the right time to purchase a property. For more information, give us a call today at (702) 485-1400.