The housing market is rebounding—at least one piece of it.
Construction of multifamily homes such as condominiums and apartment buildings surged a whopping 51 percent in September as demand for rentals continued to climb, according to the Commerce Department.
“People are moving out of Mom and Dad’s basement finally, but they are renting or buying apartments rather than homes,” said Jeffrey Greenberg, an economist with Nomura Securities International. “You have to assume another three to five years before the whole housing market recovers because of the enormous foreclosure overhang.”
Multifamily starts in September rose to a seasonally adjusted annual rate of 233,000 units, the highest since October 2008, according to government statistics released Wednesday. Single-family housing starts rose 1.7 percent to just a 425,000 annual rate.
Nomura’s Greenberg said people are just not ready to assume the downside risk of buying a home even with average mortgage rates at around 4.3 percent.
“This is what happens,” said Doug Kass of Seabreeze Partners Management. “The pendulum swings away from home ownership to rentals occurs when home prices drop by 36 percent.”Page 1 of 3 | Next Page