A new RCLCO analysis from Todd LaRue and Clare Healy gives us this snapshot of the "current situation" in new home development and construction.
Here's the key take-away, among many strong insights in this report:
With generally flat median incomes and rising costs that necessitate higher prices, the real estate community cannot afford to build new homes for middle-income households. Instead, it has focused on building for the customers who can afford it and whose incomes are in fact rising: higher income households. Where in the past it was more feasible for developers to build homes for the meat of the market (i.e., the middle class), today they are pushed to target the smaller, but more economically viable, demand pool at the top.
As we asserted in this space yesterday, that demand pool, from at least a "level-of-effort" perspective, now represents the market's "low hanging fruit."