Apartment construction on the rise
TEXT OF STORY
Kai Ryssdal: That which the housing market giveth with one hand, it taketh away with the other. There was some positive news on housing today. The Commerce Department said this morning that housing starts were up 10.5 percent in August. Double good news because a lot of economists were predicting another monthly decline. In particular, there was a big bump at the end of the summer in construction of apartments and condos.
You take out those multi-family buildings, though, and the single family market just doesn’t look so great. And that is not so good because single family houses are by far the biggest chunk of the market. And building permits for them — for those single-family houses — are the best way to figure out what the future home construction is going to be like. They were down as well.
Marketplace’s Mitchell Hartman has the news, both good and bad.
Mitchell Hartman: Harvard housing economist Nic Retsinas was trying his best to put a good face on today’s numbers…
Nic Retsinas: The housing market, if anything, has better hopes than the Red Sox which have no hope, so it’s faint praise.
‘Faint praise’ because the spring and early summer were pretty awful for home builders.
Retsinas: The numbers look good particularly on the surface, because the previous numbers were just so bad.
Builders suffered as the government’s home buyer tax credit expired, and people curtailed house-hunting.
Now, they seem to be trickling back into the market, but very slowly, says economist Chris Christopher at IHS Global Insight. He says housing often leads the way out of a recession. But not this time around. Construction jobs have actually fallen almost 10 percent.
Chris Christopher: This recovery is homeless, if you will. There isn’t a very strong uptick in volume, and in prices. Because it was a housing bubble that burst.
And Nic Retsinas says that’s still a drag on new home construction.
Retsinas: We built a lot more homes than we needed. But we keep adding to the inventory with the continuing surge in foreclosures.
That lingering hangover from the recession helps explain one bright spot in today’s report — apartment construction is way up. That’s as more people move from homes they used to own into rental units.
Hessam Nadji follows the market for real estate firm Marcus & Millichap.
Hessam Nadji: The home ownership rate has fallen by 2 percentage points. That doesn’t sound like a lot, but it’s actually 3.4 million households coming out of home ownership and into the rental market.
Also feeding the demand for apartments and condos: Young people leaving home as job prospects improve and retiring Baby Boomers looking to downsize.
I’m Mitchell Hartman for Marketplace.
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