standstill

Developers of New Housing Aim for Renters, Not Buyers

As residential building recovers from a near standstill after the housing crisis, much of the momentum is coming not from subdivisions with green lawns and two-car garages but from rental apartments. Multifamily construction nationwide is two-thirds of the way back to its prerecession peak, while single-family home construction is still only about a third of the way back to its peak, said David Crowe, the chief economist of the National Association of Home Builders.

The multifamily construction recovery, fueled by young people who are striking out on their own, is strongest in the South and West, particularly in markets where job growth is picking up. Last month, the Commerce Department released data on new construction that showed new apartment complexes were going up at the fastest rate since July 2008.

That has led to a fear of overbuilding. While rents are still rising, analysts say the steep increases between 2011 and 2012 are unlikely to be repeated as a surge of units are completed in the latter part of this year and will continue to come on the market early next year. Nationally, residential rents rose 4.2 percent in 2011, but only 3.6 percent so far this year, according to Axiometrics, a Dallas-based apartment market research firm.

Much depends on the fortunes of the job market, which industry analysts said would determine whether higher rents were sustainable.

“The real test is going to be what happens between now and April or May as we see all these new units introduced to the market,” said Jay Denton, the vice president for research at Axiometrics.

Still, vacancies remain extremely low and the pace of building in recent years has not been quick enough to replace obsolete, decrepit or demolished units, said Mr. Crowe of the homebuilders group. He projected that it would be several years before supply was back to normal.

In Houston, from January to September, construction permits for multifamily housing increased by more than 70 percent over the same period a year earlier, according to data compiled by the homebuilders group. Permits for single-family homes, by contrast, increased by 25 percent. Shares of Camden Property, the real estate investment trust that is building Camden City Centre, were up about 20 percent over a year ago.

“The demand for building is all over the country, really,” said Ric Campo, Camden’s chairman and chief executive. “We’re seeing higher rents, faster lease-ups, lower construction costs — everything you want to see. Part of it is there’s just a pent-up demand for new product because we didn’t build anything during the downturn.”

In Houston, where low housing prices have traditionally kept the cost of living down, Camden can rent a one-bedroom apartment for $1,450.

Houston is far from the only market where demand for rentals is at a fever pitch. Denver, Oakland, Seattle, Miami and Charlotte, N.C., where many of the condo projects that went bust have been converted to rentals, also appear at the top of lists by data collectors like Trulia, Zillow and Axiometrics.

The bulk of the apartments are not going to families who lost their homes to foreclosure, many of whom are renting single-family houses. Instead, the apartments are being rented by young people who had moved in with their parents during the recession, or simply had not yet moved out.

People in their early 30s, the age when many might look to buy a first home, are renting for longer periods of time, partly because mortgages are difficult to come by and partly because they have been unnerved by the turmoil in the housing market.

“That portion of the population is starting to grow again, but I think a lot of them, seeing what has happened, are not particularly enthralled with the idea of going out and buying a house,” said Steve Blitz, the chief economist at ITG Investment Research.

Michael Hoffman, a 26-year-old electrical engineer, said he moved into a two-bedroom apartment in Camden City Centre a few months ago after living with his parents to save money.

“It was easier,” he said of the rent-free arrangement with his parents. “But I felt like I was missing out on my 20s.”

Daniel Cadis contributed reporting from Houston.

Article source: http://www.nytimes.com/2012/12/07/business/developers-of-new-housing-aim-for-renters-not-buyers.html?partner=rss&emc=rss

New Reports Warn of Escalating Dangers From Europe’s Debt Crisis

The Organization for Economic Cooperation and Development said the euro crisis remained “a key risk to the world economy.” The Paris-based research group sharply cut its forecasts for wealthy Western countries and cautioned that growth in Europe could come to a standstill.

Europe’s politicians have so far moved too slowly to prevent the crisis from spreading, the organization said in a report . It warned that the problems that started in Greece almost two years ago would start to infect even rich European countries thought to have relatively solid public finances if leaders dallied, a development that would “massively escalate economic disruption.”

“We are concerned that policy-makers fail to see the urgency of taking decisive action to tackle the real and growing risks to the global economy,” the O.E.C.D.’s chief economist Pier Carlo Padoan said.

The warning came just hours after Moody’s Investors Service issued its own bleak report on Europe’s rapidly escalating sovereign debt crisis.

The credit agency warning that the problems may lead multiple countries to default on their debts or exit the euro, which would threaten the credit standing of all 17 countries in the currency union.

It also said that while European politicians have expressed their commitment to holding the euro together and preventing defaults, their actions to address the crisis only seem to be taking place “after a series of shocks” force their hand. As a result, more countries may be shut out of borrowing in financial markets “for a sustained period,” Moody’s said, raising the specter of additional public bailouts on top of the multi-billion euro lifelines currently supporting Greece, Ireland and Portugal.

“The probability of multiple defaults by euro-area countries is no longer negligible,” Moody’s said. “A series of defaults would also increase the likelihood of one or more members not simply defaulting, but also leaving the euro area.”

Despite the gloomy predictions, stocks rose sharply in Europe and Asia for the first time in more than a week, and the euro strengthened, on hopes that European leaders were working on a new approach to resolve the crisis.

On Sunday, France, Germany and Italy signaled they were ready to agree on new rules to enforce budget discipline among the 17 nations that use the euro, and encourage more coordination of economic and fiscal policy.

Those efforts have so far been overshadowed by the failure of those countries to follow through on promises made back in July to bolster mechanisms to fight the euro crisis.

In particular, authorities have been slow to implement an expansion of the bailout fund, known as the European Financial Stability Facility, that was meant to raise money by issuing bonds backed by the stronger European countries and loan it to shakier countries facing high interest rates on their debt.

France last week bowed to pressure from Germany against the issuance of a common bond that would be backed by euro-zone countries, something investors said could help calm the crisis during the long time that it will take to expand the E.F.S.F.

Germany has also resisted calls to allow the European Central Bank to act as a lender of last resort to put out financial fires during the transition to a more federalist structure in the euro-zone.

The O.E.C.D. called on politicians to get the expanded bailout fund running as fast as possible, and said the E.C.B. must be allowed to step in more than it has to stem the crisis.

For now, the organization said it expects Europe’s leaders to do the right thing, and take sufficient action to avoid the type of defaults by European countries foreseen by Moody’s, as well as ward off both a sharp pullback in lending by spooked banks and the possibility of a wave of bank failures.

The Moody’s report came as anxiety intensified over Italy, whose borrowing costs have shot back above 7 percent in recent days despite promises by Mario Monti, the new prime minister, to enact a new austerity plan designed to reduce a mountain of debt.

Article source: http://feeds.nytimes.com/click.phdo?i=a841359a9c3c80849e30d7c9d3a272a9

Developers of New Housing Aim for Renters, Not Buyers

New Reports Warn of Escalating Dangers From Europe’s Debt Crisis

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