We are in the midst of a severe housing shortage. The U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country’s demand, according to a recent analysis by mortgage-finance company Freddie Mac. As the vaccinations and stimulus support an economic recovery, household formations are expected to surge, according to Marcus & Millichap, who is predicting 2.5 million more households being formed each year in 2021 and 2022.
Drive around any large city and you see cranes. Cranes, often a welcome sight—at least for those in the construction industry—represent increases in apartment or condo-style living resulting from lack of affordable single-family home supply, desire to age in place and in migration of young, highly educated people. Hot spots include Vancouver, Chicago, Seattle and South Florida, to name a few. Due to single-family home supply being insufficient to meet demand, buyers in Palm Beach migrated towards condos where sales were up triple digits in 2020. When people own or rent contiguous properties and share common spaces, they have the ability to negatively affect each other’s property value and quality of life.