Construction Spending is at the highest level since the recession began in 2007
Construction spending is on the rise and at the highest levels since 2007 all fueled by home building. The Commerce Department said last week publicly that our construction figures rose to an annually adjusted rate of 1.1 Trillion, and that is greater than any year since 2007.
A lot more Americans are buying homes or renting which is lending to a push in residential construction. In addition a lot of Federal spending is on the rise along with state and local governments with the construction of schools, roads and public buildings. This is partially due to an increase in tax revenues, along with an increase in population growth. In the past 12 months, overall spending has increased 13%.
The construction of single family homes rose 1% in October, and manufacturers spurred their building expenditures by 3%. A huge windfall was for Federal spending at a growth rate of a 19% increase which is the largest since Oct. 2006.
A lot of Americans are staying in apartments longer which has led to an increase in residential apartment and condo building which has jumped 28% in October when compared with one year earlier. I think that a lot of the increase in apartment living is due to persons which were displaced by foreclosures, and in some cases renting an apartment is way less than ownership when you consider taxes, condo fees, and all the expenses. \
Rents have also jumped higher as a result of increased demand. Not only that, but there is very limited availability in some areas of the country and I am personally aware of this as being proven true in Miami. As a Licensed Realtor it seems like it is getting harder and harder to find good apartments for my clients at a reasonable price. It looks like our rental market is now on auto-pilot without the need for Realtors especially because of all the technology advances with companies like Zillow, Trulia, Hotpads, Apartments.com, and Rent.com.
At the same time, the low mortgage rates along with increases in job gains have led to an increase in home purchases. One area which has risen significantly is new home sales, which shows a 15% year to date boost when compared with last year.
Public construction of schools, highways and other infrastructure rose about 6.6 percent in the last year which is the highest it’s been in the last five years. It looks like over-all we are still in recovery phase and it does not appear to be slowing any.
Written by Edward Cambas Dec. 6th -2015
