John Burns Consulting, a California firm that works with homebuilders, calculated that at least 414,000 home sales did not take place last year, simply because too many grads have struggled with debt to the point where they can't pull together a down payment.
Economists at Goldman Sachs estimate, from the fall in the homebuilders' index, that construction will fall at an annual rate of 10-15% in the next four quarters.Builders are breaking far less new ground than they were.
If prices do continue to rise strongly, how long before homebuilders abandon their caution and join the house party?
With the construction of homes at a four-year high, it was little wonder that a survey of business confidence from the homebuilders' association hit its highest level since 2006.BP and its Russian partners in TNK-BP looked set to sell their joint venture to Rosneft, Russia's state-controlled oil giant.
Since councils typically expect homebuilders to pay for infrastructure or for new social homes, builders struggle to pay as much for land as commercial developers, so many suitable sites become supermarkets instead.Expensive land makes it almost impossible to build bungalows or other low-density housing and hard to build even retirement flats, which require lots of communal space.
And unlike most homebuilders, student-housing firms are not expected to build "affordable" housing— requirements which make it difficult for companies to build normal homes for rent.As more blocks are built, they suck students away from the terraces they used to rent.
Barratt Developments, Taylor Wimpey and Persimmon are variously offering to buy their customers' current homes, pay their mortgages for six months or more, or let customers purchase just a 75% stake in the new property.Government meddling is also partly to blame for homebuilders' current woes.
Although some homebuilders are heavily indebted, households are not.
A big national homebuilder based in Miami, the Lennar Corporation, said in December that it was expanding in the Portland and Seattle markets, and prices for vacant land have soared, said Dave Nielsen, the chief executive of the Homebuilders Association of Metro Portland.
With Wells Fargo, a big bank, the National Association of Homebuilders publishes a monthly index of builders' perceptions of the housing market.
The National Association of Homebuilders, which compares prices to earnings, ranks San Francisco's housing the most unaffordable in America.Add in a mercilessly complex system of tenant protections, and you get a combustible mix.
