Housing boom may not be over
Housing boom may not be over
By Floyd Norris. Copyright by The International Herald Tribune
FRIDAY, MAY 19, 2006
Home builders in the United States are finally turning pessimistic, or at least that is what they say. The National Association of Home Builders reported this past week that its monthly survey showed more pessimism than at any time since 1995. And the next day the government reported that housing starts in April were down 7 percent from March.
Housing start numbers can be volatile, however, and the number the U.S. government focuses on is a seasonally adjusted annual rate, which would be fine if weather did not have a way of distorting the statistics.
So all that pessimism may yet prove to be false.
But if the American housing boom is finally nearing an end, it is clear from the accompanying charts, showing regional activity in both apartment and single-family home construction, that it was an unusual boom. The 2001 recession had only a mild impact on apartment building and did not dent single-family construction. After it ended, the market took off.
Outside of the Northeast, where condominium and cooperative apartments remain strong, it was also a boom that saw lessening interest in multifamily housing, which includes everything from duplexes to large apartment buildings.
The charts show actual starts over 12-month periods ending in the dates shown. The figures show the change over each 12-month period from the entire year of 1997 - a period when housing starts were already relatively high.
As can be seen, the strongest growth in single-family homes since then came in the South and West regions, with the recent 12-month totals more than 60 percent higher than the 1997 figures. In the other two regions, the gain has been less than 30 percent.
In multifamily housing, the boom was in the Northeast, where the volume of starts peaked earlier this year at more than double the 1997 level.
In the Midwest, apartment starts were down sharply, while they are running very close to 1997 levels in the other two regions.
Overall, that reflects a trend toward single-family housing. The record for annual housing starts in the United States is 2.36 million, set in the 12 months ended in November 1972. In that period, 44 percent of the starts were multifamily units, whose construction was set to plunge in the recession that began a year later. Three years later, multifamily starts were down by more than 75 percent from the peak.
The peak 12 months of this boom, through March of this year, saw just 2.09 million starts. But only 17 percent of them were multifamily units, while single-family starts set records.
The speculative fervor back in the early 1970s was in apartments being financed by real estate investment trusts, or REITs.
This time it was in single-family homes, some of which were being bought by investors seeking quick profits by flipping homes they financed with innovative mortgages that had not been thought of during previous booms.
Will this boom end as badly for those speculators as the one in the early 1970s did for the REITs, some of which went broke? Stay tuned.
By Floyd Norris. Copyright by The International Herald Tribune
FRIDAY, MAY 19, 2006
Home builders in the United States are finally turning pessimistic, or at least that is what they say. The National Association of Home Builders reported this past week that its monthly survey showed more pessimism than at any time since 1995. And the next day the government reported that housing starts in April were down 7 percent from March.
Housing start numbers can be volatile, however, and the number the U.S. government focuses on is a seasonally adjusted annual rate, which would be fine if weather did not have a way of distorting the statistics.
So all that pessimism may yet prove to be false.
But if the American housing boom is finally nearing an end, it is clear from the accompanying charts, showing regional activity in both apartment and single-family home construction, that it was an unusual boom. The 2001 recession had only a mild impact on apartment building and did not dent single-family construction. After it ended, the market took off.
Outside of the Northeast, where condominium and cooperative apartments remain strong, it was also a boom that saw lessening interest in multifamily housing, which includes everything from duplexes to large apartment buildings.
The charts show actual starts over 12-month periods ending in the dates shown. The figures show the change over each 12-month period from the entire year of 1997 - a period when housing starts were already relatively high.
As can be seen, the strongest growth in single-family homes since then came in the South and West regions, with the recent 12-month totals more than 60 percent higher than the 1997 figures. In the other two regions, the gain has been less than 30 percent.
In multifamily housing, the boom was in the Northeast, where the volume of starts peaked earlier this year at more than double the 1997 level.
In the Midwest, apartment starts were down sharply, while they are running very close to 1997 levels in the other two regions.
Overall, that reflects a trend toward single-family housing. The record for annual housing starts in the United States is 2.36 million, set in the 12 months ended in November 1972. In that period, 44 percent of the starts were multifamily units, whose construction was set to plunge in the recession that began a year later. Three years later, multifamily starts were down by more than 75 percent from the peak.
The peak 12 months of this boom, through March of this year, saw just 2.09 million starts. But only 17 percent of them were multifamily units, while single-family starts set records.
The speculative fervor back in the early 1970s was in apartments being financed by real estate investment trusts, or REITs.
This time it was in single-family homes, some of which were being bought by investors seeking quick profits by flipping homes they financed with innovative mortgages that had not been thought of during previous booms.
Will this boom end as badly for those speculators as the one in the early 1970s did for the REITs, some of which went broke? Stay tuned.
posted by Carlos T Mock at 12:27 PM
0 Comments:
Post a Comment
<< Home