There were some encouraging numbers on housing.. especially on new construction starts.. Looks like numbers were slightly better than previous year and there is lot of buzz if US housing industry is coming out of recession.. Housing is big sector and once housing comes up hope is that rest of the economy will also follow.. I hope that too..
However, in my view it is too early prediction.. I still feel that banks are still sitting on lot of inventory and big chunk of mortgages are still underwater. It will take long time to this mess to clear up.. But this is just my view.. Important thing is Jobs growth and this growth too should be happening in real services and products-manufacturing. by "real", I mean that it should be a net benefit to US economy.. it should be able to generate some kind of export revenues or reduce imports..
Fortunately, we are in Silicon valley where we see lot of spurts and growth in innovative companies which redefine or create something new for entire earth.. We need more silicon valley in US or even this silicon valleys should be extended..
All this fighting in congress/senate on payroll tax cut etc.. are simply waste of time.. I don't think any employer is going to hire more employees if payroll tax is 2% less or more... there should be bigger things which should matter more to employers.. these type of doles remind me of Indian politicians promising (and sometimes delivering as well) free rice or electricity..
Any how, we are digressing from main topic.. coming back to housing.. enjoy this article for details:
Housing poised for turnaround
Homebuilders find niche in building apartment units
By Derek Kravitz
Associated Press
WASHINGTON — The depressed housing market has held the economy back for four years. No longer.
Home construction has finally begun a gradual comeback and should add to the nation’s economic growth in 2011, a turning point in the recovery from the recession.
The main reason appears to be a positive consequence of the weak economy: Apartments are being built almost twice as fast as two years ago. Renting is the only option for many people who have lost their jobs, their homes or both. Builders in November broke ground on homes — houses and apartments alike — at an annual rate of 685,000, the government said Tuesday. That was a 9.3 percent jump from October and the fastest pace since April 2010. The numbers show how far the housing industry has come and still has to go:
■ Builders should start at least 600,000 homes this year. That’s up from 587,000 last year and 554,000 in 2009, the worst year on record. In a healthy market, economists say, about 1.2 million homes are started each year.
■ The pace of apartment construction has soared. About 175,000 will be started this year, also roughly half the number in a healthy economy.
But it’s far more than the 97,000 apartments begun in 2009.
■ Single-family home construction, which accounts for about 70 percent of the housing industry, has essentially stalled for three years.
This year will probably turn out to be the worst in the half-century records have been kept.
Construction of singlefamily homes this year could reach 440,000. That would be below last year’s 471,000. In a good economy, builders would break ground on about 840,000 homes.
New homes are 20 percent of the housing market but have an outsize economic impact. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Since the recession began in December 2007, housing has subtracted between 0.5 and 1.1 percentage points from U.S. economic growth each year. Cuts in spending by homeowners have further reduced growth.
But economists say apartments are going up so fast that housing should add to economic growth this year, even if fewer families are buying houses. The U.S. economy grew at a 2 percent clip last quarter.
“Finally, it appears that the process of healing is under way,” says Joel Naroff, president and chief economist at Naroff Economics.
The better-than-expected housing data helped the stock market shoot higher.
The Dow Jones industrial average rose 337 points, its fifth-best performance of the year, and closed back above 12,000.
Housing stocks had an even bigger day. PulteGroup, a home construction and mortgage company, rose more than 10 percent, the best performance in the Standard & Poor’s 500.
Patrick Newport and Michelle Valverde, U.S. economists at IHS Global Insight, said in a note to clients that the figures demonstrate that the housing industry is “finally getting off the mat.”
The industry seems to think so, too. A survey of industry sentiment this week found builders were more optimistic than at any time since May 2010.
But the numbers remain weak, even though mortgage rates are near record lows and home prices have fallen by a third since 2006.
Tighter lending standards are preventing many families from buying houses, and diminished prices on singlefamily homes have given the industry little reason to build more.
Builders are also competing with foreclosures, which hold prices down.
Yet they have found a way to make money — by serving the rising demand for rental apartments.
The average rent has risen 2.4 percent this year to $1,004 a month, according to the real estate data firm Reis. It rose 1 percent last year and fell 2.7 percent in 2009.
PAUL SAKUMA/ASSOCIATED PRESS
Construction worker Will Capper works on a new house in Palo Alto as home building picks up in November.
However, in my view it is too early prediction.. I still feel that banks are still sitting on lot of inventory and big chunk of mortgages are still underwater. It will take long time to this mess to clear up.. But this is just my view.. Important thing is Jobs growth and this growth too should be happening in real services and products-manufacturing. by "real", I mean that it should be a net benefit to US economy.. it should be able to generate some kind of export revenues or reduce imports..
Fortunately, we are in Silicon valley where we see lot of spurts and growth in innovative companies which redefine or create something new for entire earth.. We need more silicon valley in US or even this silicon valleys should be extended..
All this fighting in congress/senate on payroll tax cut etc.. are simply waste of time.. I don't think any employer is going to hire more employees if payroll tax is 2% less or more... there should be bigger things which should matter more to employers.. these type of doles remind me of Indian politicians promising (and sometimes delivering as well) free rice or electricity..
Any how, we are digressing from main topic.. coming back to housing.. enjoy this article for details:
Housing poised for turnaround
Homebuilders find niche in building apartment units
By Derek Kravitz
Associated Press
WASHINGTON — The depressed housing market has held the economy back for four years. No longer.
Home construction has finally begun a gradual comeback and should add to the nation’s economic growth in 2011, a turning point in the recovery from the recession.
The main reason appears to be a positive consequence of the weak economy: Apartments are being built almost twice as fast as two years ago. Renting is the only option for many people who have lost their jobs, their homes or both. Builders in November broke ground on homes — houses and apartments alike — at an annual rate of 685,000, the government said Tuesday. That was a 9.3 percent jump from October and the fastest pace since April 2010. The numbers show how far the housing industry has come and still has to go:
■ Builders should start at least 600,000 homes this year. That’s up from 587,000 last year and 554,000 in 2009, the worst year on record. In a healthy market, economists say, about 1.2 million homes are started each year.
■ The pace of apartment construction has soared. About 175,000 will be started this year, also roughly half the number in a healthy economy.
But it’s far more than the 97,000 apartments begun in 2009.
■ Single-family home construction, which accounts for about 70 percent of the housing industry, has essentially stalled for three years.
This year will probably turn out to be the worst in the half-century records have been kept.
Construction of singlefamily homes this year could reach 440,000. That would be below last year’s 471,000. In a good economy, builders would break ground on about 840,000 homes.
New homes are 20 percent of the housing market but have an outsize economic impact. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Since the recession began in December 2007, housing has subtracted between 0.5 and 1.1 percentage points from U.S. economic growth each year. Cuts in spending by homeowners have further reduced growth.
But economists say apartments are going up so fast that housing should add to economic growth this year, even if fewer families are buying houses. The U.S. economy grew at a 2 percent clip last quarter.
“Finally, it appears that the process of healing is under way,” says Joel Naroff, president and chief economist at Naroff Economics.
The better-than-expected housing data helped the stock market shoot higher.
The Dow Jones industrial average rose 337 points, its fifth-best performance of the year, and closed back above 12,000.
Housing stocks had an even bigger day. PulteGroup, a home construction and mortgage company, rose more than 10 percent, the best performance in the Standard & Poor’s 500.
Patrick Newport and Michelle Valverde, U.S. economists at IHS Global Insight, said in a note to clients that the figures demonstrate that the housing industry is “finally getting off the mat.”
The industry seems to think so, too. A survey of industry sentiment this week found builders were more optimistic than at any time since May 2010.
But the numbers remain weak, even though mortgage rates are near record lows and home prices have fallen by a third since 2006.
Tighter lending standards are preventing many families from buying houses, and diminished prices on singlefamily homes have given the industry little reason to build more.
Builders are also competing with foreclosures, which hold prices down.
Yet they have found a way to make money — by serving the rising demand for rental apartments.
The average rent has risen 2.4 percent this year to $1,004 a month, according to the real estate data firm Reis. It rose 1 percent last year and fell 2.7 percent in 2009.
PAUL SAKUMA/ASSOCIATED PRESS
Construction worker Will Capper works on a new house in Palo Alto as home building picks up in November.
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