A Tale of Two Markets

April 22, 2012

The current housing market reflects conflicting reports on an almost daily basis. Many headlines claim a housing bottom has been reached, while others insist that we are nowhere near a bottom and the fog of a bad economy will haunt the real estate market for the foreseeable future. While all these claims are backed by statistics, it is important to note that there is a divide in the market in which different kinds of homes are heading in two different paths.

ConstructionChicago real estate is often a tale not of two cities, but of two markets. On one side there is the single-family market and on the other side sits the multifamily market.

Single-family housing production sat virtually unchanged for the month of March. However, multifamily housing production declined by 16.9 percent for the month resulting in a 5.8 percent drop in overall housing starts.

“While more consumers appear to be seriously considering a new-home purchase, builders will remain very cautious about starting new projects until they see more actual sales materializing,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB). “At the same time, in places where buyers are ready to go forward with a purchase, access to credit for both builders and buyers and difficulties in obtaining accurate appraisals are persistent challenges that continue to slow that process considerably.”

In March, single-family housing starts were at a rate of 462,000. This number is 0.2 percent below the revised February figure of 463,000.

“While combined U.S. housing starts lost some ground in March, this was almost entirely due to typical month-to-month volatility on the multifamily side,” said NAHB Chief Economist David Crowe. “The fact is that single-family and multifamily starts and permits were all stronger in the first quarter of 2012 than they were in the fourth quarter of 2011, indicating that the market continues to slowly strengthen, albeit in fits and starts.”

While the numbers show that both single- and multifamily homes were up from March of 2011, it is important to note that 2011 was the worst year ever for new home sales.

Housing permits, a strong indicator of future construction, were up on the multifamily market by an increase of 20.8 percent. On the other hand, permit issuance for single-family homes declined 3.5 percent.

Ups and downs will be the norm as the housing market, and all its divergent subcategories, continues to move out of the trenches towards more stability.

Categories: Economy, NAHB, New Homes

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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