When you're looking for a new city to call home or a new property to buy, you're going to run into a lot of unfamiliar terms. Talking to a real estate agent can sometimes seem like you're being spoken to in another language since there are so many insider terms. You should never be afraid to ask what they mean, because if the agent is given to understand that you know what they mean and you do not, there could be a misunderstanding over a home. We can also help you become familiar with terms. The one we'll cover in this article is "housing starts."
If you've never see the term "housing starts" before, you might think it was a typo, and that the author actually meant "housing stats" but "housing starts" is a real term. It refers to how many new homes were begun in a certain period that is covered in statistics. It is often used in articles and statistics that talk about real estate markets because it is roughly equivalent to the number of new homes builds that will soon be available.
In order to qualify as a housing start, a home must be under construction but not yet completed. Houses that are still in the planning stages and have not yet broken ground and houses that are completed but still waiting to be sold or occupied by their first owner do not count. Housing starts are usually collected over a certain period (for example one year, or one quarter) and in a specific region.
Each unit of living space qualifies as one housing start, so if a builder is constructing an enormous mansion with twenty bedrooms that is only meant to house a single family, it still only counts as one housing start. Conversely, smaller houses divided into three apartment units would count as three housing starts. Apartment buildings, despite being only one building, count for as many starts as there are units in the building.
So why would you need to know about housing starts? Well, looking at the number of housing starts over the past few years or quarters can help you determine the rate at which the city you're thinking of living in is expanding. Housing starts that do not carry over into housing units on the MLS during the next census indicate that the bottom fell out of the market and the developers ran out of money to finish.