Dear Consultant

Dear Consultant: How do we get more inventory so that the housing market has more slack?

Lesley Deutch photo

Lesley Deutch

April 17, 2024

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How do we get more inventory so that the housing market has more slack?

John Burns Research and Consulting estimates that the US housing market is undersupplied by -2.1M units (-0.7M for sale and -1.4M for rent). While the influx of apartment supply in 2024 will help alleviate some of the shortage, there is still a long way to go to bring housing demand and supply back into balance.

We have identified four ways to provide needed housing inventory to an undersupplied market:

1. Simplify homes to create more attainable price points.

Builders could boost US home sales and help alleviate the undersupply—heavily concentrated in the lower price tiers—by providing lower-priced homes.

To keep costs down, builders and architects have continued to simplify homes, taking a step further and removing parts of the home. Lennar removed the garage to create a more affordable community at Elm Trails in San Antonio. These detached 1-bedroom homes are around 600 square feet, and pricing starts from the mid- $100,000s.

Elm Trails | San Antonio | Lennar

2. Have a growth mindset.

The pandemic caused heightened migration, and municipalities open to new development thrived. Myrtle Beach, for example, saw total building permits explode post-pandemic, rising from 7,840 in 2019 to 13,060 in 2023. New residents followed the construction activity; Myrtle Beach now ranks within the Top 5 net migration destinations in the US.*

3. Government support

Direct government assistance for developers and builders through tax credits, grants, and funding can help increase housing inventory, making it financially feasible for new construction at lower costs. For example, Florida’s Live Local Act (SB 102) created a property tax exemption for developers providing housing to households earning up to 120% of the Area Median Income (AMI). The Act also allows developers to preempt local governments for zoning changes.

4. Technology wildcards

The housing industry is using abundant new technologies that could increase inventory. Building a home is a relatively slow, labor-intensive process, and technology innovations in manufactured housing are lowering costs and saving time. Onx Homes utilizes X+ Construction™ to build a home in 30 days in its new manufactured-housing facility in Pompano Beach, Florida. Reducing cycle times, using less labor, and making construction more efficient can accelerate housing inventory increases in the US.

On Lehigh Acres | Lehigh Acres, FL | Onx Homes

Simplifying homes, finding markets with a growth mindset, lobbying for governmental support, and technological wildcards can all help alleviate the housing shortage. JBREC’s consulting team advises all types of industry participants on how to increase housing supply. Challenges persist, but we consistently search for viable solutions.

Keep the questions coming! You can submit questions here or email us at dearconsultant@jbrec.com.

*For more information on US migration and demographics, please check out our US Demographics Insights and Strategies report.

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About The Author

Lesley Deutch photo
Lesley Deutch
Managing Principal
Lesley has more than 25 years of experience consulting with executives in the finance and real estate industries throughout North America. She works across a wide spectrum of industries including apartments, for-sale housing, high-rise development, urban projects, single-family rental, building products, and commercial developments.

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