Friday, October 17, 2014

Apartments Lead September’s Housing-Starts Growth (And why this is a positive signal for those considering the purchase of a house).

It is becoming a renters' nation and building construction is reflecting that fact.

The pace of home construction climbed last month on a jump in apartment building, according to the Commerce Department.

Construction started on new U.S. homes rose 6.3% in September, with the annual rate hitting 1.02 million. It's a continued slow recovery following the crash of the real estate bubble.



However, apartments led the construction growth in September. The construction pace for single-family homes rose just 1.1% in September, while apartment starts in buildings with at least five units climbed by 18.5%.

I am generally not a big fan of home ownership from an investment perspective, but for those considering a housing purchase, this winter may be an ideal time to buy. We have had a significant slow down in money supply growth, fewer people are considering buying houses than before the financial crisis of 2008, interest rates are extremely low and given a long-term perspective price inflation will return and make any housing purchase a bargain at current prices.

In other words, competition for buying a house is relatively low right now. You want to own before that competition picks up. Wait for the cold of winter and buy when a seller is desperate.

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