The U.
S.
economy and housing market continue to improve.
However, the economy has been altered in significant ways by the down turn.
Consumers are focusing on saving and reducing borrowing.
Businesses are more conservative.
These changes along with others are manifesting themselves in the market.
How will can investors capitalize? Recent news reports show housing starts up more than 40% from a year ago.
Housing inventory for starter homes is down.
Home square footage for starter homes has fallen sharply.
A new industry called "Small Homes" or "Tiny Homes" has begun taking root.
U.
S.
consumer debt continues to fall at a sharp rate.
Availability of credit to consumers is down.
We've experienced 3 years of constrained construction and current rates are about 50% of the household development rate that demographics say we need.
Investors must recognize that there is a new normal and it involves buying with cash or renting.
The impact is here to stay.
At the same time, people will need a roof over their heads.
I believe several items can be forecast.
Rentership grows significantly.
I project more than 50% of homes will be rented a decade from now.
The boarding house returns as a respected business and normal feature for people living on their own.
Roommate living grows significantly.
Home size falls dramatically.
Communities and towns have to adopt different zoning strategies to account for all of these changes.
As investors, we should look for communities and large homes that fit the roommate "plan".
We should invest in cash flowing higher density multifamily formats.
We should look for housing construction opportunities that play into these trends and for opportunities that make more efficient use of the largest new homes.
We should seek zoning relief based upon the same.
We should concentrate on areas with disproportionately depressed construction and likely post recession employment rebounds are likely to drive extreme supply shortages.
Some of the midsized economies where the glut was not as great and recession construction was equally hit may stand out for this.
Investors concentrating on these factors have the opportunity for tremendous value gains as the economy improves and the developing world's need for material drives up the value of existing construction because of the increased cost of new construction.
Properly positioned gains of 15% to 20% annualized are well within the relm of possibility for the time frame.
Even greater gains may occur as the employment situation begins to reverse itself and the sustained under development of inventory results in a sharp increase in demand.