responding to market, contractors may be building less expensive homes in 2020, says report

With demand continuing to exceed supply, and the market for higher-end properties increasingly tight, more builders next year may find themselves putting up houses below the $300,000 mark.

According to a study released by the economic research company Capital Economics, homes priced at that amount or less are expected to see their share of the market increase in 2020 over this year.

In its Builders Begin Slow Move Back to Starter Homes report, Capital Economics additionally predicts that such properties, currently comprising around 50 percent of the market, could see their share increase to 55 percent by the end of next year.

“Tight supply of affordable homes and a relatively large increase in their price are encouraging builders back to the starter home sector,” says the report, adding that such homes will also be smaller in size.

The Capital Economics report comes as Forbes magazine is predicting that new home prices next year are expected to rise by about 5.6 percent, up from this year’s increase of 3.5 percent.

The publication notes that the 2019 market has been “one of low wages, high demand and limited supply—particularly on the lower-priced end of the market.”

Today’s largest home-buying sector is made up of Millennials, born between 1981 and 1996, followed by Baby Boomers, and Generation X, born between 1964 and 1981.

Looking for better deals, Millennials are also increasingly purchasing houses, or having homes built, in smaller suburban neighborhoods on the far outskirts of the nation’s major metropolitan areas.

By Garry Boulard

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