The New Normal for Housing Construction

There are many generally reliable sources of data and articles that suggest that U.S. new household needs are about 1,500,000 Latest Floor Plan per year. This assumption developed from the steady growth of new housing between the early 1990s and 2007. Is this true?
The likelihood is that this assumption is deeply flawed for several reasons. The main and leading reason against this assumption is that prior to 1990 for almost 30 years new housing averaged in the 600,000 to 800,000 housing units per year level. At the same time, the nation base household growth pressure was very much like projections for the country for the next 40 years. Given that today’s household base Find A Plumber is substantially larger than then the replacement requirement is different, but otherwise, household growth is probably not much different than pre-1990 levels. This would put new household needs between 700,000 and perhaps 900,000 per year. All this adds up to say, we aren’t going to need nearly what has been being added on an annual basis for the next perhaps 1 to 2 generations and may be for good.
In addition to this factor, the need for mcmansions will be substantially reduced over the next 15 years. In fact, we face a huge oversupply today that probably causes issues for the entire period. These mcmansions are likely to become a source of significant substitution as baby boomers will be faced with a weak market for these properties. The clear obvious effect will be these properties become homes to 2 or more households. The fact is this could provide 200,000 to 300,000 of the base new housing need for much of this period.
Additionally, 50% of new housing needs are anticipated to be multifamily. Arguably substitution is one source, but the other component comes from what previously would have been single family housing demand.
Investors need to be acutely aware of these facts as they analyze and choose where to put capital. New home construction except in the highest growth corridors should not be the chosen direction.

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