New apartment buildings abound
Housing starts took a big jump in February as the national rate rose 22 percent. Most of those were apartment buildings.
Apartment building construction skyrocketed 82 percent, accounting for most of the starts.
Foreclosures not down
News homes are sprouting up even as more homes every day are foreclosed and left vacant. Sales of new homes will have to compete with prices on foreclosed and auctioned properties.
Demand for rental properties
The apartment building construction makes sense, though. As families are pushed out of their homes because of foreclosure many are seeking rental properties. Rent doesn’t require families to try to secure personal loans.
Sign of healing or fluke?
Market analysts are not ready to say that this spike in building means the economy is headed for recovery.
“We’re inclined to write this off as a weather-related fluke for now,” wrote economists for Wrightson ICAP.
Winter is generally a very slow construction season, and housing starts historically pick up when snowy places start to thaw out.
Sunshine brings ray of hope
Though the change could be blamed on the weather, it still brings some pretty impressive news. The rise in housing starts was the biggest in 19 years. It is also the first time in eight months that housing starts have gone up instead of down.
Still a long way to go
The jump in housing starts marks a step in the right direction, but it’s far cry from the glory days of the housing boom. Compared to February 2008, housing starts are still down 47 percent. And compared to the peak of the housing bubble in 2006, they are down 74 percent.
Obviously, you are going to have a little bit of both going on. IT is the end of winter, so naturally the weather is such that construction is good to begin again. However, the boom in apartment starts is a good sign in that there is a demand for housing. (Granted, there always will be, but still.) From what I hear, the big banking firms are starting to lend again, and at really good rates.
Apartment buildings or not, it’s still a good sign that the economy is heading towards recovery. And it does make sense. Owning a home is obviously a huge long-term commitment that more people no longer want to get into (at least for right now). The economy is still at a very unstable state and jumping into something like this is probably not the smartest move to make.