By George Roberts III
The September 2020 Monthly New Residential Construction Report Released October 20th shows that residential permits, which are a leading indicator of housing starts, have recovered to pre-COVID-19 levels. However, multifamily permits (5 units and above) have lagged and remain below pre-COVID-19 levels. The large backlog in housing due to over one decade of under building will take several years to work through. This lack of new housing is a key factor in keeping housing prices high.
In a nutshell, this means that if you are a real estate investor, you can expect many years of price appreciation. Whereas the outlook for single-family housing looks strong for years to come, the multifamily outlook looks even better. The relative lack of new construction in the multifamily space means that there has never been a better time to reposition apartments.
The historical range for housing starts is roughly 1.6 Million per year. These levels of construction have not been seen since the great recession.
This article has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for legal, tax, or accounting advice. You should consult your own legal, tax and accounting professionals.
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