When Down Is Up!

May 20th, 2009 categories: The Market

News sources are reporting that housing starts, on the whole, have dropped significantly. Yet read into the numbers and you find a different story. The majority of the drop has been in apartment construction, but new home starts have increased!

“The decline was wholly the result of a sharp drop in ground-breaking for apartment buildings and other multifamily dwellings. Single-family home construction rose 2.8% to 368,000 in April, after rising slightly in March as well.”

“They say builders breaking ground for new homes is the most reliable sign that mortgage woes are getting resolved, that prices have fallen to appropriate levels and that the glut of unsold homes has thinned.”
CLICK HERE TO READ THE WALL STREET JOURNAL ARTICLE

“One of the housing market’s main problems is a glut of supply—too many homes for sale. Idle homebuilders mean fewer new homes coming onto the market, thus hastening a bottom for the market. “We’re getting there in a brutal fashion,” Wolfer says, but at least we’re “in the process of bottoming out.”
CLICK HERE TO READ THE BUSINESSWEEK ARTICLE

Sounds like bad news right? For workers in the construction industry this is bad news, because it means fewer jobs in the short term, which means more pain in the near future for construction workers. However, in order for the market to turn, construction has to slow to allow for existing inventory. Once the standing inventory is sold, then there is room for new construction. Long-term the drop in housing starts should be viewed as good news as it is part of our economic recovery.

This is good news for homeowners who want to sell, because it means there will be less new product to compete against. Simple economics 101 says less inventory means more demand and more demand puts upward pressure on values. Both articles quoted above reference a bottoming in the home market. If this is the case, this is good news too.

To bring this new full circle Honolulu real estate, I am seeing an increase in buyer’s looking for homes. Showings are increasing on our listings and I am seeing fewer units available for sale. This could be evidence that our market is firming up. Think about it.

CLICK HERE TO SEARCH FOR YOUR NEW HOME

If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.

This entry was posted on Wednesday, May 20th, 2009 at 10:01 am and is filed under The Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.