Increase In Housing
According to an article from cnn.com, the building of new homes is finally on the rise. In March, for the first time since 2008 the housing starts have topped the one million annual rate.The housing starts annual rate was up 7% from February at 1.04 million annually, and up 47% from the past year. The reason for the increase in the building of homes has to do with more apartment and condominium complexes, which has five or more homes in them, being built. Units like that increased 27% in March from February and 82% from the previous year. With this increase in home building, there is also an increased desire for rental housing. The workers who were stuck living at home with their parents during the recession are now moving out in large numbers and looking to rent. Also, people who used to own homes before the recession that then got foreclosed are scared to buy again. Executive vice president of Resource Real Estate "said that even with a surge of multifamily construction, there is likely to be a shortage for years to come". With the almost record low mortgage rates, lower unemployment and a drop in foreclosures, home prices have increased. Because of the increase in sales and home values the overall economic growth has increased. Some concerns about the growth of housing are the rising prices of raw materials and shortages of construction workers. A lot of the builders are struggling with credit issues for lot development because of the rising construction cost and because of this fewer building permits are being filed even with the rise of the need for housing. A chief economist for the National Association of Home Builders, David Crowe, "estimates that the raw materials costs are up about 10% overall, and some key items are up much more than that". Plywood is twice as expensive, lumber is about 60% more, and drywall is up by 40%. The higher costs and labor shortages "are one of the reason single family starts are down. He estimates if builders were not facing those constraints, the annual rate of single-family starts would be about 100,000 higher".
This article is showing that while there is a demand for increase in housing, the market can not meet the demand. Many factors are contributing to the problem, limiting the growth on housing which also limits the growth on our economy.
Source:
Isidore, Chris. "Home Building Rises to Key Milestone." CNNMoney. Cable News Network, 16 Apr. 2013. Web. 18 Apr. 2013.
Critique-by Josh Sibio
ReplyDeleteI think that who ever wrote this explanation of the article did a good job of expelling it. The economy of housing can be very difficult to understand, but they had done so in a way were it is easy, doing something like this can be very difficult, one must understand the subject very well to do this.
I also thought that it was very interesting to see that there are many other out side affects of the housing market that are not thought about. For an example, Like the cost of raw material and having a building permit and the amount of builder that are out there. Thinking about this lets me see that its not just about more people buying houses to make the market how we would like it, but making the things that go into making the house less expensive. Which in turn would create a cheeper house. Having a cheaper house would encourage more people to enter the market. Thus benefitting our economy.
As i was reading i had a really good idea of what the article that he was talking about before i read the actual article. This shows that even though he was trying to apply the article to the material that we have learned, he did not get off track of the main point. I also liked how he used the numbers from month to month, making it even easer to understand.
After reading this i have been enlighten about what is going on in the housing market behind the curtains. And i am also able to apply what we have leaned in class to the everyday housing market.
An outsiders view on the housing Market
ReplyDeleteIt is good to hear that the building of new homes has increased once again. I feel that this truly shows that we, as a nation, are finally digging ourselves out of the hole that the recession put us in. The fact that the housing market has topped the one million annual rates for the first time in five years is very impressive and really great news. The article makes it apparent that the market for apartments and condominiums has increased significantly in the past year. This increase, could simply be the result of people moving into the city so that they can decrease their commute to work on a daily bases or simply the fact that people are wanting to start a new life on their own. Either way you look at it, the fact that there is an increase in any type of housing whether it’s a house or an apartment, is a good thing. Along with the increase in apartments being built, there is also an increase in rental housing. This is most popular with those who cannot afford to pay for the mortgage of a house or an apartment, but would like to still like to live in either place. Renting a house or apartment is most popular with those who do not know if they will be in a certain area for long, so they can rent out a space without having to worry about putting it back on the market if they decide to move. Rental properties also give people who had to move back home after the recession hit, a chance to move back out on their own again, since renting a property can be much cheaper than buying it.
Although there is a significant increase in the building of apartment complexes and the sale of rental properties, the Executive Vice President of Resource Real Estate believes that there will still be a shortage of construction being done and people buying property. As an immediate reaction to unemployment and foreclosure rates decreasing, and record low mortgage rates, the housing market has increased the home prices. For those trying to move out of their parent’s homes or find a home for a growing family, this seems unfair and almost wrong. It is almost as if the housing market is punishing those who are now back on their feet with a successfully consistent job. When I read this I was a little shocked that they would raise prices just because more people are employed and are not having to pay high mortgage rates anymore. It seems unfair to charge people more for their homes just as they are starting to feel better about themselves and the economy.
The increase in the cost of housing does seem unfair, but it turns out there actually is a real explanation as to why prices have increased, other than the market is just trying to dig into people’s pockets a little bit deeper. It turns out that the cost of the raw materials used to build houses and apartment complexes, has risen by ten percent. The cost of plywood has increased by twice as much as it used to cost, lumber costs 60% more, and the cost of drywall has increased by 40%. All these materials are key to building any type of building and with the cost of these materials increasing significantly it makes it difficult for the housing market to offer a cheap price on new construction. The increase in such basic material makes you almost wonder that if the cost of these materials has gone up so much, how much has everything else that goes into building a house, gone up?
With the increase in jobs being offered and thus the increase in demand for housing, it is almost unfair that the cost of living is just out of reach. This article just lets us college students know that even if we do find a job that pays well, we still may not be able to move out of our parent’s house just yet. The fact that we cannot afford housing is unfortunate not only for us and our parents, but it is unfortunate for the economy, because that means it cannot grow as quickly as hoped.