Housing construction jumps to 4-year high
BY BAILEY DICK Sun-Times Mediafirstname.lastname@example.org October 17, 2012 8:46AM
A concrete patio is leveled off on a new home on Valcour Drive in Glenview off of Shermer Road. | Joel Lerner~Sun-Times Media
Updated: November 19, 2012 3:06PM
Home construction is climbing back from its deep trough, and providing more evidence that the housing market is recovering, experts said Wednesday after the Commerce Department said builders started construction on homes in September at the fastest rate since July 2008.
New construction on both single-family homes and apartments is up 15 percent from August, at a seasonally adjusted annual rate of 872,000. Single-family home construction rose 11 percent last month, while apartment building jumped more than 25 percent.
Applications for building permits are also at the highest rate since July 2008, up by almost 12 percent to an annual rate of 894,000.
“[The] numbers represent at least a partial resurrection of the housing market,” said Carl Tannenbaum, chief economist at Northern Trust. “... We still have a long way to go to get back to normal levels of activity.”
Strict lending standards for mortgages will hold the numbers back, he said.
“While the numbers are eye-popping, the trend is sound,” Tannenbaum said. “In the coming months, we will continue to see increases, but they will be a little more moderate.”
The data is important not only to builders, but to the economy as a whole — even though new homes represent only 20 percent of the housing market. According the National Association of Home Builders, each house constructed creates on average three jobs for a year and generates approximately $90,000 in revenue.
Builders have been feeling more confident about the market. Builder confidence increased last month, reaching its highest rate in since April 2006, according to a survey released Tuesday by the National Association of Home Builders.
Local builders and developers have seen growth this year.
Paul Bertsche, vice president and general counsel of CA Development, says he’s “pumped” about the market right now.
“We are actually on pace to build twice as many homes as we did in each of the last four years,” he said. “We’re way ahead of the last four years.”
Bertsche said CA development, which is based in the city but also works in the suburbs, has sold 16 homes already this year-double what they sold last year.
Shannon Gibson-Giampa, the director of sales for Meadowridge, a development of duplexes and townhouses in Northbrook, says she’s seen sales jump recently.
“We have eight homes under construction. Four are already sold, and the other four have very serious interest,” she said.
In terms of the housing market recovering, Gibson-Giampa said “ I think it’s at the beginning stages.”
Art Zwemke, manager of the Robert Arthur Land Company in Batavia was more cautious. While the numbers released Wednesday are promising, they don’t reflect the local housing market in the Chicago area, he said.
“That’s a national number, and the Chicago market is still really weak. We’ve lost so many jobs during the downturn, and the housing market in Chicago is lagging behind other markets that have rebounded more strongly,” he said.
Zwemke said his company has been getting more calls from people looking for homes than they were a year ago, but that numbers still aren’t back to where they were.