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This article is presented by Connect Invest. Read our editorial guidelines for more information.
It would be an understatement to say the COVID-19 pandemic ushered in an era of economic turmoil, presenting challenges across various sectors. Real estate debt investors, known for their gradual wealth accumulation, still experienced favorable returns on their investments amidst the pandemic. However, investors encountered a scarcity of opportunities.
Buyers experiencing low housing inventory and intense competition, as well as investors navigating uncertainty in the economy, weren’t the only ones coping with the obstacles brought by the pandemic. The homebuilding industry grappled with disruptions in the supply chain, labor shortages, escalating construction material costs, high interest rates, and government regulations, posing significant hurdles to new construction projects.
According to a June 2020 poll conducted by the Associated General Contractors of America, 68% of contractors had seen a project canceled as a result of the COVID-19 pandemic; 48% saw a project that had begun before the pandemic halted.
Emerging from the pandemic, there remains a persistent demand for new construction to ease the stress of unaffordability for most buyers. While homebuilding rates continue to stall, or even slightly tumble, both buyers and investors are left pondering: When will new construction reach levels that start to alleviate market pressures?
Facing the Escalating Housing Shortage
Low inventory and high interest rates are the dominant forces shaping the real estate landscape over the past three years. The scarcity of available homes triggered a chain reaction, propelling prices to unprecedented heights.
Despite this, prospective homebuyers continued their search, even as affordability became increasingly out of reach for the average buyer. The resulting relentless competition continues to persist, driven by the stark reality of inadequate…
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