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2018 Forecast: Affordable Homes in the Suburbs

In 2018, anticipate home-building will shift to the suburbs, according to a forecast recently released by Zillow. Cheaper construction costs, coupled with demand for entry-level homes, is expected to lead to increased inventory in the suburbs.
“We’re on the other side of the housing recovery, and the real estate market looks quite different than it did 15 or even five years ago,” says Dr. Svenja Gudell, chief economist at Zillow. “We have a huge generation entering the market. They really want to be homeowners, and they’re faced with an inventory crisis that leaves them with few options. Builders won’t ignore this hungry market, and we’ll start to see a rise in new construction at the more affordable end, instead of all the luxury buildings we’ve seen lately.
“However, builders are also facing high costs, so instead of adding density in cities where zoning laws and land costs often preclude affordable building, we’ll see the suburbs grow and expand outward.”
Inventory is currently down 12 percent year-over-year. If builders follow the forecast, millennials in need of options and reasonable prices will make their way out of cities and into the suburbs.

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