Photo credit: Jason Pratt cc
The U.S. Census Bureau and Department of Housing and Urban Development (HUD) jointly released the housing starts and permits report for July 2014. At the surface, July 2014’s housing starts of 1,093,000 over June’s starts of 945,000, which is a 15.7 percent increase, suggests a housing recovery. These numbers represent all types of housing. Looking deeper into the report’s numbers, we find that nearly 40 percent of these starts are multi-family rental units.
On the permits side of the report, nearly all of the increase was due to multi-family unit construction, which increased 24 percent to 382,000 units. Single-family residential permits only rose by 6,000, or less than 1 percent. While the numbers for overall housing have increased, it’s a certain type of housing that should be noted as having the big increases. Multi-family.
Could we just as easily ask if the ‘housing recovery’ is a societal shift in how we choose to pay for our housing space? In a lukewarm economy where monthly job market reports skew heavily towards increases in part-time and lower paying jobs; it’s no surprise that the housing market is responding to the demands for more multi and single-family rentals. We’re seeing lower tier priced housing continually getting snatched up by corporate landlords, which makes it impossible for people in lower-wage jobs, which have grown by 2.3 million since the end of the recession, to buy upper tier priced homes. Inventory for these higher priced homes are simply increasing.
Brent Nyitray, Director of Capital Markets for iServe Residential Lending says, “Can’t complain about the number, which was the highest in eight months. Still, ‘normalcy’ is around 1.5 million units per year, which goes to show how depressed housing still is. We probably will not hit historical numbers until the first time homebuyer returns.”
Nyitray zeroed in on the necessity of the first-time homebuyer returning to the home-buying game. This underlines the enormous concern with the housing market and economy as the two are inextricably linked. The key here is higher paying jobs will help shake the hesitancy from the home-buying shy Millennials and other first-time home-buyers.
HousingWire. “Truth is, those recent housing numbers aren’t so shiny” 20 August 2014. http://www.housingwire.com/articles/31088
U.S. Census Bureau News. “New Residential Construction in July 2014” 20 August 2014. http://www.census.gov/construction/nrc/pdf/newresconst.pdf