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Housing Market Continues to Recover - 8/5/15

The nation’s housing market is in recovery.  The most recent release on housing starts indicates that new home construction has risen to its second highest level since two thousand and seven, with much of that gain driven by apartment projects.  While that sounds like good economic news, it could also mean that the housing market’s improvement is having slightly smaller impacts on the performance of the overall economy – this according to Moody’s Analytics. 

That’s because single family home building has relatively greater economic impact than apartment construction on a per unit basis.  Each multifamily housing start supports about two jobs over the course of a year, while each single family start creates between four and five.  Apartments are typically smaller than single family homes and therefore fewer building materials need to be transported, fewer walls constructed, and fewer appliances installed. 

On the other hand, more apartment construction could help ease pressure on rents, which have been rising so quickly, that they are impacting overall inflation figures.  As reported by Bloomberg Business, the cost of living in the U.S. rose in June for a fifth straight month, with rents climbing the most in nearly two years.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.