Here We Go Again - Are We Overbuilding America?

I've been asked recently for my opinion on the number of homes being built in the USI've been asked recently for my opinion on the number of homes being built in the US. Specifically, people are wondering if the ghost of 2006 has come back to bring more homes to the market than what can be consumed or simply put, they want to know "are we overbuilding America today?"

In order to answer this question, I have assembled data on the homes that have been built in the past as well as those that are being built today, and I'll show you what the data is telling us about new home construction activity in the US.

Some of our readers might be in local market situations that differ from the US overall, but for the most part, this report will reflect the activity found in the majority of US housing markets.

New Construction Listings In Tallahassee

The following list includes all new construction homes for sale in Tallahassee, and you'll see immediately that it holds far too few homes to alleviate our gross supply imbalance. In fact, Tallahassee's lack of inventory is consistent with what the majority of US housing markets have been reporting for the past two years.

149 Properties
Page 1 of 13

Are We Overbuilding America?

How Often Do Home Prices Fall?

I believe that the biggest fear that drives concern about overbuilding stems from memories of the Great Recession of 2008 when home values declined more than 30% before reaching market-bottom. Unfortunately, most people tend to go on recent memory rather than reviewing available data that includes far more history, so let's start our analysis with the question "how often do home prices fall?"

Graph shows 150 years of US average home prices

This graph plots the year-over-year change of the average home price in the US going back more than 130 years to 1890. The average home price is shown in blue while the annual change is plotted with vertical bars: green bars if home prices rose and red bars if home prices declined.

Over the past 100 years, we've seen home prices decline substantially three times, but only twice for long-duration declines. The declines occurred after the great depression, the onset of World War II, and then the recent Great Recession of 2008.

That means that we've only seen a decline once in the past 80 years, and it lasted five years from 2007 through 2011. I believe this recency bias has people looking for declines around every corner, rather than observing the supply and demand dynamic to help them formulate the most likely direction of home price movement.

The US Population Growth Is Slowing But Growing

When trying to determine the number of homes that need to be built each year, one could start by looking at the change in the US population.

Graph shows 50 years of US population change

The graph above shows the US population in blue, and the ten-year growth rate in red. From 1960 through 2000, the ten-year growth averaged 11.2% but has since fallen to an average of 9.6% for the past 21 years. This decline would suggest fewer homes are needed than what we have seen previously.

But measuring population change alone does not fully explain what's going on in the world of people-moving. There are demographic changes that are occurring that can impact the need for homes too.

For example, the U.S. Census found that 12.3 million American households were formed from January 2012 to June 2021, but just 7 million new single-family homes were built during that time. It is this fact that caused realtor.com (in a published study last year) to report a housing shortage of 5.24 million homes.

Population growth and household formation growth has made it clear, more homes are needed.

Recent US Housing Market Reports

Will Assumable Mortgages Save Housing?
Will assumable mortgages save housing? Home affordability is becoming one of the hottest topics in the economy, but I was recently asked if assumable mortgages might bring some relief to homebuyers. This video shares what I think about how mortgage assumption will impact housing.
Home Prices Are Doing What?
The hype-headlines are scary, exclaiming falling home prices and the coming housing market crash. Here's what the housing market facts reveal:
Will NINJA Loans Bring Down The Housing Market?
Housing Crash Coming? If you remember back to the housing bubble, we saw the growth of "NINJA" loans, as they were a segment of the home sales explosion.
Economic Outlook For The Housing Market
Joe Manausa gives an update on the economic outlook for Tallahassee and the US housing market. Includes housing market forecast, housing market activity, and new construction analysis, and reveals how Tallahassee compares with the overall US housing market.
6 Housing Market Rumors Debunked (1 Confirmed)
7 different housing market rumors are perpetuated as “FACT” in various forms of "hype." Discussion of this "housing market news" has been ongoing for years, so today, I want to put them all to rest.
Who To Blame For Soaring Home Prices
There is a huge shortage of homes in the US, and there is only one culprit to blame, and I’m going to tell you who it is!
What You Don't Know About Home Prices!
Home prices are gaining traction as topics in both the mainstream media and social media, but there are three common misconceptions about the change in house prices that are unanimously reported as unquestionably true.
The Truth About Real Estate Foreclosures Today
The Truth About Real Estate Foreclosures Today. There's a lot of hype and speculation about home foreclosures in the US. Joe Manausa unravels the latest Black Knight Mortgage Update to explain home foreclosures and how they will impact the housing market.
Is The Supply Of Homes For Sale Finally Rising?
Is The Supply Of Homes For Sale Finally Rising? Is the US housing market heading for a crash? Will home prices fall? Follow the metrics that clearly show what to expect from home prices and the supply of homes for sale in 2022 and beyond.
Zillow Exposes Mainstream Media On Home Prices
Zillow serves up the data that exposes the poor reporting of the mainstream media on Zillow home prices and that conditions are not what they seem.
House Prices - Inflation Adjusted Home Prices
Just How High Are Today's House Prices? The price of houses in the US has risen to a toxic level, and many are wondering how they will be able to afford to live in their local communities
Podcast: Housing Myths Dispelled
Home Building Hero David Belman and Joe Manausa discuss many of the "myths" that have been published in the media about the housing market.
USA Today Misleads Readers About Home Prices
USA Today Misleads Readers About Home Prices - Median Home Price: The USA Today Network has been misleading readers, using the median home price change suggesting that houses are getting cheaper and a real estate crash is upon us. Is this poor journalism or is there something more to it?
Home Affordability Crisis - Major Housing Market Shift
Home affordability is plummeting, and this home affordability forecast explains why real estate prices are becoming less affordable with each passing month.
Housing - Do You Follow Your Gut (Or Analytics) In Housing?
I think the signs in the housing market are loud and clear, yet most real estate reports I read or view are missing the most critical factor in housing today.
Will 2022 Be The Year Of The Foreclosure?
Will the housing market soon be flooded with foreclosures? There are eight million borrowers in the US that enrolled in loan forbearance plans that allowed them to quit making mortgage payments for quite a long time. Will 2022 be the year of the foreclosure?
Home Ownership Is Radically Different For Millennials
This is a simple millennial housing case study that will clearly show that the millennials will face a housing market like no other generation going back to post-World War II.
US Housing Market Forecast 2022
Complete housing market forecast for 2022 including data on Population, Mortgage Interest Rates, Jobs (The Economy), New Home Construction, Foreclosures & Forbearances, Supply & Demand, Home Prices, and Rental Rates.
US Homeownership Rate Crash
Homeownership has been high since World War II, but there is a generational shift in the US housing market that is occurring with two key trends that will soon destroy home affordability and then homeownership in the US.
When Will Home Prices Fall?
Are Home Values About To Crash AGAIN? Now that we've seen about three years' worth of skyrocketing home prices, prudent buyers with memories are asking when home prices are going to start falling again.
4 Important US Housing Market Trends Impacting 2022
Here’s the thing about forecasts, they require a working knowledge of what consumers face when selling and buying homes. It's these pressure points that I'll share with you as I prepare my forecast for 2022.
Foreclosure Wave? The End Of The Mortgage Moratorium And Forbearance
Many claim a foreclosure tsunami will be the cause of a new housing bubble, yet I believe they are a little short-sighted and I have some evidence that shows this is just not going to happen.
How Often Do Home Prices Fall?
Are home prices falling? Will house prices fall soon? Home prices are soaring, buyers are having to pay above most sellers' asking prices, and the housing market feels just like a feeding frenzy during Shark Week on the Discovery Channel.
Proof Of Runaway Appreciation In Real Estate?
Over the years, we've come to expect "normal" real estate appreciation to be just over 3%, but homes are appreciating much faster than a normal rate. Home values are moving higher fast enough to cause alarm bells to ring, and today's report will show you exactly how the housing market has performed.
Signs Of A Housing Market Collapse?
When we study the US median market rent, we see signs that paint a clear picture of the future of home prices and home values.
Home Affordability Forecast
Real estate prices are moving higher (faster). This is a real estate forecast you need to see. Many have been misinformed about home prices and the housing market and must watch and internalize the message from this video.
Housing Shortage Confirmed: Median Market Rent Explosion
The lack of home builder production has home prices and home values soaring, now look at what's happening to rents too!
What Do Low Mortgage Interest Rates Really Mean?
Every article or video about mortgage interest rates conveys that rates are low, but do you really know what it means?
Here's Where Home Affordability Is Heading
There is a generational shift occurring in the housing market that I reveal in this video. I’m talking about how buying a home over the next twenty years will be unlike what previous generations saw since the early 1980s.
The Truth About The Housing Bubble Of 2021
Will there be a housing bubble in 2021? - If you look at the most active real estate videos on YouTube, you'll find that the forecast for the next real estate bubble is very popular. Is there a housing crisis and will there be a housing crash in 2021? Or is it just sensationalism that drives people to watch these so-called reports? This video exposes real evidence and I will give you data that tells you everything you need to know about a housing bubble in 2021.
Are We Overbuilding Again?
I've been asked recently for my opinion on the number of homes being built in the US. Specifically, people are wondering if the ghost of 2006 has come back to bring more homes to the market than what can be consumed?

How Many New Homes Were Built?

If we want to better visualize the need for new homes, we can start by looking at a graph of the number of homes that have been built over the past 70+ years.

Graph shows 50 years of US average home construction

This graph plots the number of new construction homes completed each month. The blue line shows the total number of units, and it is this line that we'll evaluate.

From 1970 through 2006, the average number of homes built was 129,434 each month (1.55M annually), but that fell to just 84,430 monthly (1.01M annually) over the past fifteen years. That's a difference of more than 8 million homes when compared to the recent norm.

How Many New Homes Are Under Construction?

This next graph is built on the data that has people concerned that we might be overbuilding America.

Graph shows 50 years of US homes under construction

Much like the previous graph, this one breaks down homes by type, with the total shown in blue. The blue line has jumped significantly over the past two years, resulting in the highest number of homes under construction than we've seen since the 1970s.

Currently, there are roughly 1.6M homes under construction, which is 4x the number seen at the bottom of the housing market ten years ago. Without context, it's no wonder that many are concerned about over-building.

Get Our Free Market Update

Weekly Special real estate report covers the Tallahassee real estate market

Other buyers, sellers, lenders, and real estate agents have this critical information, and now you can too!

Get immediate access to our most recent newsletter.

Let more than 30 years of experience work for you with charts, graphs, and analysis of the Tallahassee housing market.

Each Monday morning we send out a simple, one-page report that provides a snapshot of the Tallahassee housing market. It only takes 2 minutes to read, but it gives you better market intelligence than most real estate agents possess. Just tell us where to send it below!

How Many New Homes Were Authorized But Not Started?

There is another category of new construction homes that we must include in our count, and it is those homes that have been authorized (permitted in most areas) but have not yet started.

Graph shows 50 years of US homes authorized but not started

This graph also reports a higher number than we have observed since the 1970s, with an absolute explosion of authorizations occurring within the past two years.

While not every home that gets permitted gets built, this information is still valuable in assessing the pipeline of new construction activity and the potential for new homes being built over the next few years.

How Many New Homes Were In The Pipeline?

When we combine the data from the previous two graphs, it provides a good look at the number of homes in the pipeline.

Graph shows 50 years of US new homes pipeline

The graph above shows that there are fewer than 2M homes in the pipeline to help fill the need for new homes needed each year PLUS the 5.24 million homes that comprise the shortage that has caused prices to run out of control.

If all those homes were delivered at once, it would only make a healthy dent in the shortage. Unfortunately, those homes cannot all be delivered right away.

Top Tips For HomeBuyers

9 Tips For Buying A Home In A Bidding War
Follow these 9 home buying tips to get your offer approved ahead of other buyers. These 9 tips for buying a home today will help you overcome multiple offers on a home.
Buy A Home Now Or Wait For 2023?
Are Home Prices Dropping? Will Rising Mortgage Interest Rates Bring Falling Home Prices? If you have been waiting for falling home prices, this is a very important video for you. Do you buy a home now or wait for 2023?
How To Get A Good Deal On A Home
Watch this short video before you buy a house to ensure you know whether to buy a home now or wait! This is the smart way to get a good deal on a house today.
Don't Lose Your Real Estate Contract Binder Deposit
As you prepare to buy a home, you'll want to follow this advice for home buyers. These real estate tips will help you ensure your real estate contract binder deposit is not forfeited to the seller due to mistakes made along the way.
Should You Get A 40-Year Mortgage?
Before you decide upon a specific mortgage amortization on a home loan, take a look at this quick case study that compares a 15-year loan with a 30-year loan and a 40-year amortized loan.
What are closing costs when buying a home?
If you are planning to buy a home now, or in the next few months, there are some fees and expenses you’ll need to pay in addition to your down payment that you should know about. Other than your down payment, all money you spend when you buy a home are called “closing costs,” and you should know about them ahead of time. Even experienced buyers can be surprised at all the costs that are associated with buying a home today. This short video will cover what you need to know so that you can (one, be prepared,
How Much Should You Put Down On A House?
Need some downpayment advice? Want to know what to put down on a house? There are issues you might not have considered when determining a home down payment, but my home buying tips include a side-by-side comparison of some options that will help you make the best decision.
Don't Buy A Home Without Seeing This First!
If you plan to buy a home now or in the next few months, let me tell you about a critical document that you absolutely must get from the seller before you start spending any money on inspections or repairs. The document that I’m addressing is the SELLERS PROPERTY DISCLOSURE, and you should not just HOPE that the seller will include it in the marketing documents. Instead, demand to see this document with a current signature and date from the seller on the day the contract is executed. As you will discover in
10 Mistakes Homebuyers Make In The Home Mortgage Process
10 Mistakes Homebuyers Make In The Home Mortgage Process | Home Buyer Tips - If you are getting ready to buy a home and you are financing your purchase, I am going to cover a list of ten things you are going to want to avoid until after you have closed on your home. The home mortgage process is very structured, loaded with rules and guidelines that you must follow in order to be approved. Remember, a bank is going to lend you hundreds of thousands of dollars, so it's not too shocking that they want you to f
Need To Move? Buying vs. Renting Today
Wondering whether to buy a house or rent a house in 2022? I have created a simple real estate case study to help you make your next move confidently
Is Home Ownership A Hedge Against Inflation?
Could homeownership today still be a smart hedge against inflation? This is a study of real estate during inflation.
How To Buy Your First Home - Step By Step
How To Buy Your First Home - Step By Step - The home buying process from start to finish. Walkthrough the entire homebuying process, great for first time homebuyers and anyone buying a home this year. This is Home Buying 101.
How Often Do Home Prices Fall?
Are home prices falling? Will house prices fall soon? Home prices are soaring, buyers are having to pay above most sellers' asking prices, and the housing market feels just like a feeding frenzy during Shark Week on the Discovery Channel.
How To Use Price Per Square Foot When Valuing A Home
Price per square foot is a measurement of a home's value, but the price per square foot alone is not an effective way to determine the price a home will sell in today's housing market.
What To Offer On A Home In A Sellers Market
We are experiencing the strongest seller's market on record, so you have to be prepared to make the right kind of offer if you want to buy a home today. And it's not all just about how much to offer, there is so much involved when making the "RIGHT" offer in a seller's market. I have shared my experience of selling thousands of homes in a seller's market, both with working for buyers and with working for sellers. I have shared 3 important home buying tips to enlighten you on what matters most to sellers so
Why It's Alway About Supply And Demand In Real Estate
It's all about supply and demand. The real estate supply and demand dynamic tells us everything we need to know to forecast home sales in any given area.
Top 10 Tallahassee Neighborhoods
If you want to know where homebuyers chose to live in 2021, then this video was produced specifically for you. Follow along as I share the top-ten selling communities in Tallahassee in 2021, with insight on what it costs to live in each neighborhood as well as the number of homes that sold.
10 Home Inspection Issues And Tips
Moving from one home to another has enough stress and chaos built into the entire affair, and the home inspection is often the biggest stressor. Here's how to avoid home inspection stress!
Real Estate Negotiation Strategies For Each Market Condition
If you mishandle the negotiation on a home, several things will possibly happen, and all of them are bad. First and foremost, you’ll leave money on the table through either the sales price or the terms that are negotiated. Today, buyers are losing out on homes they want to buy and it’s often due to poor positioning in the negotiation. And while we are in the midst of a historic sellers’ market, I’m seeing sellers leave money on the table even when they have multiple offers! #realestatenegotiation #homenegot
Four Smart Ways To Use A Real Estate Contract Assignment
Contract assignability allows buyers to give or sell their rights to another buyer, and that creates opportunity. Tune in to discover four reasons to assign a real estate contract (including contract assignment profits)
What Does A Transaction Coordinator Do?
When you are selling a home or buying a home, a critical member of your support team is your transaction coordinator. Here's what to expect!
Real Estate Appraisal Versus Fair Market Value Of A Home?
What is the difference between a real estate appraisal and the fair market value of a home? If there is one practice that confounds both home buyers and home sellers alike it's the fact that the majority of real estate transactions close at the mercy of an appraisal conducted for a purpose that most consumers do not consider. Understanding these differences will save you money when it comes to buying or selling a home, and it will help you appreciate the need and value of a real estate appraisal. But here’s
What Is A Real Estate Hot Sheet?
What Is A Real Estate Hotsheet? - When agents are new to the real estate industry, they are trained to monitor the " MLS Hot Sheet" every morning in order to stay informed of the inventory changes. So what is a real estate hot sheet, and can non-Realtors get access to it? ?? Link to the current real estate Hot Sheet: https://www.TallahasseeHotSheet.com Up until now, the hot sheet was proprietary information only available to paid members of the MLS. But recognizing that inventory is so low in the Tallahass
Who is responsible for determining the value of the home you want to buy?
If you are planning on buying a home now, or within the next three to six months, you are going to have all sorts of questions pop up for which you’ll want answers. Among the most important of these will have to do with figuring out what a home is worth. As a matter of fact, I was recently asked this question “Who is primarily responsible for determining the market value of the home you want to buy?” Questions about valuation are very common from buyers of all experience levels because nobody wants to overp
What Is The Definition Of Distressed Property?
What Is The Definition Of Distressed Property? I received this question from "Rich" who asked: Joe, what is your definition of a "Distressed Property" - foreclosure, disrepair, time on market, location? That's a great question because we have a ton of people who have registered to receive our regularly updated list of distressed properties for sale in Tallahassee, so I know the topic is very popular today. In fact, it’s not uncommon for people just entering the market to buy a home to be focused on distress
Why Use A Buyer's Agent For New Construction?
Why Use A Buyer's Agent For New Construction? - I was recently asked about the benefits of having a buyers agent for new construction. Specifically, she asked why she should use a buyer's agent for new construction? My short answer is that you should always hire a well-trained advocate to help you buy any real estate, including new construction homes. This video though will specifically address several benefits of having your own advocate when purchasing a brand new home, whether it has already been built
What Is A Seller's Market In Real Estate?
You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means? This real estate frequently asked question comes up from time to time when somebody is buying a home or selling a home. They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home in the Tallahassee real estate market? I have prepared this short video to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth? Recently, a customer buying a home asked me a simple question. She inquired “how much does a pool add to the value of a home?” Pretty simple question, right? Well, by the end of this short video, you’ll know the not-so-simple answer (and why this is so important).
How Many Times Will A Home Seller Counter Offer?
This real estate frequently asked question is from a recent home buyer. If you are about to buy a home in Tallahassee Florida or beyond and you’re trying to better understand how the real estate negotiation process will work, then understanding how to better control the negotiation is going to keep some of your hard-earned money in your pocket!
What You Should Know About School Zones When Buying A Home
What You Should Know About School Zones When Buying A Home - Buyers always ask about school zones, even when they do not have school-aged children. They understand that homes in the highest-rated school zones often fetch the most money, so they believe they are putting themselves in the best position for a future sale by purchasing a home in an acceptable school zone today. Unfortunately, this logic is flawed. If you are buying a home with no need for a school yet plan on including your opinion of the publi
Real Estate Is Local - What This Means!
If you plan on buying a home, or selling a home, you’ll want to understand the local nature of real estate and use it to your advantage.
US Homeownership Rate Crash
Homeownership has been high since World War II, but there is a generational shift in the US housing market that is occurring with two key trends that will soon destroy home affordability and then homeownership in the US.
20 Percent Down On A Home?
Learn how to decide how much you should put down on a house. Here is some down payment advice that might help you keep some cash in your pocket.
How Low Will They GO?
Mortgage interest rates are probably the lowest you will ever see in your lifetime, keeping the demand for Real Estate extremely high!

How Long Does It Take To Build A Home?

This graph gives us an idea of when we should expect to see the new homes that are in the pipeline today.

This graph gives us an idea of when we should expect to see the new homes that are in the pipeline today.

Even with construction delays, single-family homes are being delivered in about 8 months, while multi-family properties are taking closer to 1.5 years. When we use these numbers to calculate delivery dates, we can deduce the following.

Roughly one million single-family homes and another six hundred thousand multi-family homes should hit the market in 2022. That means we expect 1.6M homes will be added.

If the supply shortage is 5.24M homes and the "average" annual need for new homes sits at about 1.2M homes, we will see the shortage drop from 5.24 M homes to about 4.8M homes. In other words, even with optimistic expectations on the new construction industry to overcome supply chain issues and deliver homes, the US housing market will still have a huge shortfall of homes at the end of this year.

The Rental Market Has A Shortage Too

Most people are going to believe that demand for homes will decline when mortgage interest rates push higher. While this is highly likely in the "for sale" market, it is absolutely not true in the "for rent" market.

Graph shows 50 years of US new homes pipeline

This graph was produced from data provided by Zillow. It approximates the median market rental rate since 2015, and lately, rents have been soaring. Why?

Because the low inventory of homes for sale has consumed part of the rental inventory and now the shortage exists in both markets. If consumers get pushed out of purchasing, they will face a rental market that we have never before seen. Rents are soaring now, what will they look like when demand rises due to the fall of home affordability in the "for sale" market?

Putting It All Together

There is an ever-present fear of a housing market crash (defined by falling home prices) that is founded by the memory of the Great Recession of 2008. So many people lost their homes and/or their equity when home prices tumbled more than 30%, so the fear is very real.

The Great Recession crash occurred with no supply imbalance. In fact, it was the Fed's tightening of the money flow that crushed demand, pulling buyers out of the "for sale" market and displacing them to the "for rent" market. At the same time, we saw much of the inventory of homes for sale become inventory of homes for rent.

But as we've seen from the previous graph, today's rental market does not have the excess inventory for consumers to turn to when demand softens in today's housing market.

I do not believe we will see home prices dropping, but I am VERY concerned about the health of the housing market. Whether you are buying or renting, there are not enough residential units to satisfy our larger population. This means that both prices and rents should continue to rise until the imbalance is corrected.

I opened this article with the question: Are we overbuilding America? I believe the data shows that the answer is a resounding "NO." In fact, the opposite is true, we have underbuilt America and the result is rapidly appreciating home values and rental rates. We need our local community leaders to work together to solve the housing problem before things get any worse.

There are a lot of people who endorse Joe for the job of selling your home, from Barbara Corcoran (Star of ABC's Shark Tank) to Preston Scott (host of Tallahassee's top daily "Audio Magazine," as well as the thousands of happy customers Joe has helped in the past. Listen why!

Post a Comment

(850) 366-8917