Housing: When Good News Is Bad News
The Commerce Department announced today that housing starts made a surprise rebound, jumping 8.2% in April. Great news, right?
Read a little closer: construction of single family homes continued to fall. The jump was entirely attributable to a 36% rise in apartment building construction starts. More apartments, fewer homes: that suggests people moving from home ownership to rentals. In other words, fewer buyers will be available for the housing market.
The U.S. has maintained one of the highest home ownership rates in the world. It saddens me to see it changing— and baffles me that so few economists apparently anticipate the consequences.
One economist, hailing the good news, nevertheless cautioned, "It is definitely too early to uncork the champagne on the long and winding road to more-healthy housing-market conditions." A more-healthy housing market? Not with this trend.
Read a little closer: construction of single family homes continued to fall. The jump was entirely attributable to a 36% rise in apartment building construction starts. More apartments, fewer homes: that suggests people moving from home ownership to rentals. In other words, fewer buyers will be available for the housing market.
The U.S. has maintained one of the highest home ownership rates in the world. It saddens me to see it changing— and baffles me that so few economists apparently anticipate the consequences.
One economist, hailing the good news, nevertheless cautioned, "It is definitely too early to uncork the champagne on the long and winding road to more-healthy housing-market conditions." A more-healthy housing market? Not with this trend.
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