Why is it a good time to build?
TEXT OF STORY
Kai Ryssdal: Here is the tale of the tape for the housing market in the late summer of 2009. Construction overall went up last month, that is according to the Commerce Department. Most of that was new apartment buildings. Construction of single-family homes actually fell for the first time in six months. But still, ground is being broken. So let’s get back to that opening question. We asked Marketplace’s Jeff Tyler why now is a good time to build.
JEFF TYLER: A lot of the current construction didn’t just start just last month.
Sam Khater is senior economist with the real estate analytics company First American Core Logic.
SAM Khater: The construction process takes several years from beginning to completion. So I think what you’re seeing here is some projects that began at the peak, or as the market began to deteriorate, and so, they continued on with those projects.
In some areas, the demand for apartments is driving construction. Take Los Angeles.
CHRISTOPHER Thornberg: We’re sort of ground zero in the foreclosure crisis. We’ve seen a tremendous decline in prices. But we don’t have enough housing.
That’s Christopher Thornberg with the consulting firm Beacon Economics. He says not all markets are created equal. Some parts of the country, like Texas, still have decent housing markets.
Thornberg: There’s always going to be a little bit out there, here and there, in these pockets. The real question is: how large these pockets are.
Not large at all, in Thornberg’s estimation. The country built too many houses during the boom years. So there’s millions of units waiting to be sold. Add in foreclosures, which put even more inventory on the market. And fewer people are moving because they owe more on their homes than the homes are worth.
Thornberg: And all that is going to put a big damper on any kind of rebound in the housing markets.
Any real rebound for the construction industry is a long way away. Analysts says there’s enough housing on the market to meet demand for up to three years.
In Los Angeles, I’m Jeff Tyler for Marketplace.
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