Apartment nation: Multi-unit housing starts up 416 percent from 2010 low.

[eridani]

Apartment nation: Multi-unit housing starts up 416 percent from 2010 low. Builders preparing for a nation with high rental demand.

http://www.doctorhousingbubble.com/apartment-nation-us-renters-households-renting-demand/

There is a simple bet to take if you believe housing is going to lead this nation into a next wave of prosperity. Take a bet on home builders. The argument is that the U.S. population continues to grow so therefore, prices on homes will simply continue to go up. But what if the growth is coming to households with lower wages? The iShares U.S. Home Construction ETF is down over 6 percent for the year while the S&P 500 is up 1 percent. What gives? Isn’t the housing market recovering? Prices are up because of constrained inventory (now slowly picking up), investor demand (starting to wane), and artificially low interest rates. You’ll notice that few of the major reasons for higher home prices have to do with household balance sheets improving. If you truly believe housing has healthy demographics ahead you would bet on home building. This index is moving in the opposite direction of prices. The place where we do see home building is with multi-family building permits. Builders are gearing up for a nation of renters. In fact, multi-family housing starts are up a massive 416 percent since their low in 2010. Apparently builders are realizing that with incomes so low and weak household formation that when these households begin to form, the first step will be in a rental. Many in the Millennial cohort live at home while house horny parents try their best to out-bid investors.

Multi-family housing starts up 400+ percent

There is a simple bet to take if you really think the housing market is going to take the lead in a new recovery. Bet on U.S. Home Construction. Simple enough. You can purchase the ETF tracking the sector. As I mentioned before, this ETF is down over 6 percent for the year. Why? Because when it comes to supply and demand, you actually need the right supply and the right demand. You don’t see Ferrari setting up shops on every corner in Detroit. I’m sure people would love a Ferrari but simply put, they don’t have the income for this. Similar to housing in places like California, current residents do not have the income to buy even with artificially low interest rates and paltry down payment requirements. This trend has actually caused an out migration of domestic Californians out of the state for over a decade.

[yeoman6987]

1. I just found out the other day

that my area in Arnold, Maryland, are not allowed to have any apartments or even twins. I thought that was kinda weird.

[kaiden]

2. Denver's infill construction is exactly that.

All new buildings going in around the renovation of Union Station in LoDo are retail/apartment mixes. By the time the construction is finished in 2016, there will be enough apartments to house 60,000 people.

[AnneD]

3. There has been ....

a lack of construction in multifamily housing for years. This info is not news but overdue news.