Undersupply of Housing in the U.S. - Advest is Part of the Solution

Today’s housing crisis is much simpler: not enough supply.
 

Undersupply of Housing in the U.S. - Advest is Part of the Solution

America’s last housing crisis was complicated and involved many factors.  The crisis was the collective creation of banks, lenders, homeowners, rating agencies, and underwriters.  Today’s housing crisis is much simpler: not enough supply.  

Since 1959, single-family housing starts have occurred at an average seasonally-adjusted rate of 1.1 million homes.  In 2006, just before the Great Recession, single-family housing starts hit an all-time high of 1.8 million units. But in the years following, homebuilders have not built single-family homes at that pace - let alone at the long-term historical average rate.  Even during the deep recession of the 1970s builders added significantly more homes per household than they are constructing now. Additionally, a study conducted by Freddie Mac concludes the current annual rate of new construction is about 370,000 units below the level required by long-term housing demand.  And, according to the Federal Reserve Bank of Kansas City, home-building per household has never been lower.

Real estate experts and economists cite many factors contributing to the construction slump.  Many homebuilders have not fully recovered from the last recession and have crawled back to the market at a slow pace. Trade-school enrollment is down, depriving many builders of skilled labor. Similarly, declining numbers of immigrant construction workers have depleted homebuilders of unskilled labor. Regulation and red tape also make it difficult for many homebuilders and developers. In 2001 William Fischel of Dartmouth College coined his “homevoter hypothesis”.  The theory is that homeowners have an incentive to resist development in their local neighborhood, since doing so helps maintain the value of their home.

Advest is Part of the Solution

We are doing our part by making funds available for new construction homes. At Advest, we understand the needs of builders and developers and know timelines frequently change. We are flexible and can work closely with the builder. We can fund the purchase of land and cover most or all of the construction costs. Traditional lenders simply can’t compete with our proven ability to underwrite ground-up construction loans and close quickly.  We are proud that many families are currently living in newly renovated or constructed residential properties that Advest has financed.

Market ViewsSean Rayner