Home supply in the Madison area is low and the demand for housing is booming, yet home building levels have been flat for the last 4 years. So why aren't more homes being built in Madison and Dane County? One industry expert recently shared his insights with me (see below).
Why aren't more homes being built in and around Madison?
Before the 2005 housing downturn, activity with developers and financial institutions in various stages of planning and completion was robust. It was a financially rewarding time to be a lender or a builder. When the downturn hit, the emotional and financial shock took many by surprise and is reflected in the current reluctance of lenders to provide capitol, and developers and builders to take chances.
The one exception to this is the large home-building companies. The large builders have taken advantage of improving market conditions, while smaller to medium builders struggle to find property to build on. They have had to adjust their pricing and size to fit where building lots are available.
The home building industry is currently being dominated by the big players. What is missing from the recovery is the medium to small builders who left the market starting in 2005 and never returned.
What does this mean for the market?
With fewer new construction homes entering the pipeline, we're expecting relatively low levels of housing inventory for the foreseeable future. The new normal for Madison area real estate will be a market that generally favors sellers over buyers. Of course conditions can vary a lot by location, property type, and price point. Contact us anytime you have questions about the market in your neighborhood or condo association.
This article is published courtesy of: Dan Miller, REALTOR Mad City Dream Homes & RE/MAX Preferred