Building Starts highest in the past 8 years!

On Friday, the U.S. Department of Commerce reported 896,000 housing starts on a seasonally adjusted annual basis. The number of starts fell short of analysts expectations who had foretasted 915,000, but exceeded June’s reading of 846,000 housing starts.

Year over year increase of 1-4 Unit Homes fell by 2.20%, but the apartments (5 or more units) rose by 20.9 percent.  Increased demand for rental housing is recognized as the catalyst for the rise on apartment constructions.   

What’s interesting from these statistics is that the some home builders are avoiding the construction of single family homes due to high cost of material and labor.   Ironically, our local data also support the challenge of justifying our investors ROI to purchase and rehab Single Family Homes in Los Gatos.  

For instance, with an average sales price of $1.2M in los gatos for a tear down home and construction cost of $600-$800k; and the resale value of $2.5M its impossible to justify these projects which will take about 2 years of hand-hand combat with the Town of Los Gatos planning commission.  

The decline of Single Family starts is alarming since it does not solve the continued shortage of inventory which has been responsible for the continued rise of home prices in Santa Clara County and our own immediate area in Los Gatos.

What does this data tell you about the future trends in housing!?  We would love to hear from you.

[maxbutton id=”2″]