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Homebuilders Find Solace in Surging Multifamily Market

by Chicago Agent

The recession has been tough on construction, but the multifamily boom is putting many workers back to action.

Construction has been one of the hardest hit sectors of the housing downturn, and though economic tides remain uncertain, the growing multifamily market has been a source of growth and jobs for construction workers.

As a recent HousingWire article paints it, the nation’s large inventory of shadow properties – roughly 6.6 million by recent estimates – do nothing but linger on the market, not only putting downward pressure on prices but also rendering any new construction all but obsolete, given the preponderance of existing properties.

And the data has shown the shadow inventory’s effects. Housing starts were down 4.1 percent from November to December, and as we just reported, new-home sales were similarly down, decreasing 2.2 percent monthly and 7.3 percent year-over-year.

Yet, with the huge upswing in multifamily developments, many of the same construction workers that were laid off from single-family building projects are now finding work with multifamily developments, as David Crowe, the National Association of Home Builders’ chief economist, explained in a recent press release.

“Many in construction have found or are looking for jobs in other sectors. Some uptick in residential remodeling and multifamily has employed a few more workers,” Crowe said. “Multifamily rental construction is trending upward, and it is definitely the brightest sector in the broader housing market.”

As a result, construction employment numbers have improved dramatically. Though unemployment for construction workers is still at 16 percent, it’s down from 21.8 percent at the start of 2011 and from 27.1 percent from the start of 2010.

And based on the latest numbers on multifamily building, those numbers could improve even further. According to the Commerce Department, multifamily completions were up in December by 51.5 percent from November and 47 percent from December 2010, while housing starts for multifamily units were up 60 percent in 2011, suggesting even more completions in the future.

In fact, the multifamily sector is promising even from an architectural standpoint. The latest Architecture Billings Index, which charts the reported billings from architecture firms and, as a result, future construction activity, was in positive territory for the second straight month in January, which indicates increased billings. And the sector of construction that yielded the most billings? Multifamily developments.

So though construction remains a tough field, it would appear that the multifamily sector is providing a very welcomed taste of growth for the economy.

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