Rents Skyrocket & Housing Supply Shrinks

If rents are rising and there is a dramatic housing shortfall, the question remains: why are developers not building?

Here's the rub ... 61% of Americans say they cannot afford a home and?developers can't make many projects pencil. They pursue housing projects when they can see a clear path and profit.??The following points can help shed light on why more housing is not being built:

• Land and Building Regulations

- Developers often inquire about local regulations before initiating a project. While zoning requirements are essential, less restrictive zoning can encourage new developments.

• Financing Challenges

- Rising interest and cap rates, coupled with investors seeking higher returns, are decreasing the value of completed projects. Until land prices drop, it may be difficult to justify new constructions, especially if profit margins are insufficient for project completion and resale.

• Tax Incentives

- Favorable tax incentives are crucial for attracting developers. Tax relief can drive construction by making projects more financially viable. Local governments offering tax abatements and incentives can attract new construction projects, creating more housing options for residents.

• Rent Regulations

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• Transit-Oriented Development Opportunities
• Affordability vs. Market Rate Ratios

Each of these factors plays a critical role in shaping the feasibility and attractiveness of housing development projects.

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