Tuesday, September 23, 2014
Inquirer Daily News

Multifamily: That's the ticket

Construction spending in October barely edged above September; the only bright spot continues to be multifamily.

Multifamily: That's the ticket

  Except for pending-sales increases nationally and regionally in October, this week so far has been another downer for real estate.
  Today’s misery comes from the Census Bureau, which reports construction spending in October was up just 0.1 percent from September.
  The figure includes the amount spent on residential improvements, but many economists tend to extract it from the total because, as IHS Global Insight’s Patrick Newport points out, “this category is badly estimated.”
   Minus the improvements, construction spending actually dropped 0.1 percent.
   Private residential construction grew 3.4 percent month to month. Excluding improvements again, however,  spending was up just 0.4 percent as a 0.6 percent increase in single-family construction offset a 0.4 percent decline in the multifamily category.
   Despite the October gain, Newport points out, single-family construction, like new-home sales and single-family housing starts, is stuck at the bottom.
   Despite a second straight monthly decline, and given the recent pickup in starts, however, the multifamily housing segment “is on a recovery path,” Newport said.
   Multifamily seems to be the winning ticket!
   The 180-degree turn from buying to renting is benefiting the rental market across the board. In Philadelphia, it is a huge draw for investors, Marcus & Millichap reports, with vacancy rates at 4.4 percent and monthly effective rents set to rise 2.7 percent this year.
    Rent.com reports its survey of property managers of 29,000 communities nationwide found that 45 percent of property managers report lower vacancy rates than 2010.
   What is more, rents will rise 3 percent nationally through the third quarter of 2012, Rent.com reports.
   Even more? The numbers of concessions being offered to renters to lure them to apartments is declining.
   One more thing before I let up: The National Association of Home Builders says the confidence level of members who build 55-plus rental apartments is on the way up. Not so for the for-sale segment, however.
   That said, fixed interest rates are at 4 percent, Freddie Mac reports, and some builders are sweetening the pot, as this link to Builder Online I retweeted yesterday demonstrates http://j.mp/ulPGbt
    By the way, @alheavens at Twitter for those who want to follow. And check out my Home Economics piece on negative equity in Friday’s Business section.

About this blog
Alan J. Heavens blogs about home improvement and the real estate industry and hosts regular chats on those topics. Reach Alan J. at aheavens@phillynews.com.

Alan J. Heavens Inquirer Real Estate Columnist
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