The Light: 4 Goals for the Housing Market in 2021

The Light: 4 Goals for the Housing Market in 2021

February is goals month at John Burns Real Estate Consulting, a time where we reflect on our accomplishments in 2020 and establish our objectives for 2021. This week we highlight the goals housing industry executives should be setting for the coming year.

Build-to-Rent Goal: Increase supply! Build-to-rent is at the start of a cycle and we expect many new communities will break ground and deliver homes in 2021. Geographically, we expect additional supply in the Southeast where build-to-rent operators bought 8% of finished lots (according to our Burns 4Q20 Residential Land Survey), as well as Florida and the Southwest where build-to-rent accounted for 4% of finished lot sales.

The New Home Market Goal: Manage sales and plan ahead. Home prices are accelerating rapidly (we forecast 13% in 2021) but construction costs are up as well (9.4% year over year on average). As a result, most builders are metering home sales in 2021, and many are running out of lots. For 2021, builders will need to focus on future lot supply. With land prices at all-time high, location and future home prices are key inputs to successful planning.

Apartment Goal: Focus on suburbs with an eye to urban markets. The suburban markets will continue to outperform the urban apartment markets in 2021, although we expect some recovery in more dense metropolitan apartments as renters return and the cities reopen with lower rents.

Building Products Goal: Ramp up capacity and ship! Building material and product suppliers are struggling to fulfill demand across new residential and remodeling markets as the desire for better housing soars. Supply chain delays are now the #1 barrier to growth according to 364 remodeling companies in our inaugural quarterly remodeling report, the “US Remodeling Index” (USRI). If manufacturers can collectively increase capacity, the pace of industry growth will skyrocket.

At John Burns Real Estate Consulting, we always end our goals with strategy in the form of action items to Keep, Start and Stop. Let the build-to-rent and housing industry KEEP growing rapidly, START ramping up capacity in Building Products, and STOP predicting the demise of urban markets in 2021.

Contact Lesley Deutch or Ken Perlman for other inquiries and great ideas on how to succeed.

Lesley Deutch If you have any questions, please contact Lesley Deutch, Managing Principal, at (561) 998-5814 or by email.
Ken Perlman If you have any questions, please contact Ken Perlman, Managing Principal, at (858) 281-7214 or by email.