Construction of single-family homes cooled off slightly in January after surging in the final month last year. But a rise in permits suggests builders are growing more confident that more buyers are ready to come off the sidelines.

The Commerce Department said Thursday that builders broke ground on a seasonally adjusted annual rate of 699,000 homes in January. That's up 1.5 percent from December and nearly matches November's three-year high for starts.

Construction crews began work on 508,000 single-family homes last month. That's a 1 percent drop from December and the first decline in four months. A big rise in volatile apartment construction helped offset the decline in single-family homes.

Still, December single-family homes were revised up strongly to show builders started 513,000 homes — a 12 percent gain from November.

And building permits, a gauge of future construction, rose 0.7 percent. The majority of those permits were for single-family homes. It can take 12 months for a builder to obtain a permit and construct a single-family home.

Single-family home construction rose in each of the final three months of last year, bringing the pace of those starts to the highest level since April 2010. The modest but steady gains helped boost confidence among builders after the worst year for single-family home construction on record.

"The upturn in permits and starts in recent months has been consistent with the surge in the ... survey of homebuilders, which has surprised the markets to the upside for five straight months," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. "The new home sales numbers have not yet responded but builders seem confident that if they build, buyers will come."

The critical gauge of the housing market's health has a long way to go before most declare a full recovery is under way. The current pace is less than half the rate in which those homes went up during the 1990s. And it's only one-quarter of the 1.82 million single-family homes that builders started in January 2006, at the peak of the housing boom.

Most analysts say it could be years before the industry is fully recovered from the damage caused by the housing bust.

Builders are starting to see some signs of progress.

A measure of builder sentiment has risen for five straight months and is now at its highest level in nearly five years. Many builders are seeing more people express interest in buying a home, leading them to believe 2012 could be a turn-around year for the market. Mortgage rates have never been cheaper. And home sales started to rise at the end of last year.

Yet for all their optimism, builders began just 430,900 single-family homes last year. It was the fewest on records dating back a half-century. And home prices are still falling.

Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Builders are struggling to compete with deeply discounted foreclosures and short sales — when lenders allow homes to be sold for less than what's owed on the mortgage.

After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.

Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That's nearly twice the markup typical in a healthy housing market.

--The Associated Press

The rest is here:
New home construction rises 1.5 percent on budding apartment projects

A four-level, 42-unit apartment building is just too much development on a Sutherland Avenue lot less than an acre in size, according to the owner of adjoining property. But the Metropolitan Planning Commission says the developer has variances in place to allow construction.

MPC has given unanimous approval to a use-on-review review request by Hatcher Hill Properties LLC to build an apartment building on a 0.84-acre lot on the northwest corner of Sutherland Avneue at Concord Street, providing that applicant Tim Hill secures two more variances from the Knoxville Board of Zoning Appeals.

Richard Cadmus, who owns property bordering the lot to the west, told MPC last week that jamming the project onto such a small lot will hurt the value of his property, which contains a commercial building.

Cadmus said MPC was allowing what amounted to a rezoning of the property through variances to a higher level of development than its actual zoning allows. However, during the planning commission's meeting Feb. 9, MPC Vice Chairman Bart Carey told him that MPC has to accept variances that developers are able to get through the zoning board.

"Those variances are in place and they are what we have to start with," Carey told Cadmus.

Tom Brechko, an MPC planner who reviewed the proposal, told MPC commissioners that the developer has received four variances so far: Reducing the front yard setback requirement on Concord Street from 25 feet to 17.5 feet, reducing the southwest side yard setback from 12 feet to 9 feet, reducing the front yard setback on Sutherland Avenue from 25 feet to five feet and reducing the minimum parking structure requirement from 58,000 square feet to 35,960 square feet.

However, Hill will need two more variances on other issues before MPC can sign off on the proposal, Brechko said. One is that the building may not cover more than 30 percent of its lot. The proposed building would cover 55 percent. The other issue is that the development would be required to have 16,800 square feet of usable open space but it only has 2,000 square feet.

If Hill is unable to get approval for the two variances, he will have to appear before MPC with a revised plan, Brechko said. Cadmus said he will oppose the variance requests when they come before the Board of Zoning Appeals. Cadmus said that, at one point, he had offered to sell his property to Hill but the two could not agree on a price.

Go here to see the original:
MPC approves 42 apartments on Sutherland Ave. lot

Wednesday, February 15, 2012    Last updated: Thursday February 16, 2012, 1:59 AM

BY KATHRYN A. BURGER

The Park Ridge Planning Board has approved the construction of a fifth apartment building at the Ridge Manor Apartments located at 71-91 Hawthorne Ave. The approved plan complies with all borough codes, with one exception. A variance was needed to allow the front of the new building to be 23.3 feet from the front of an existing building; the zoning ordinance calls for a minimum of 60 feet.

STAFF PHOTO BY KATHRYN A. BURGER

The Park Ridge Planning Board recently approved the construction of a fifth building at the Ridge Manor Apartments, 71-91 Hawthorne Ave. The four existing buildings, portions of which are pictured here, face west. The new building will be located partially in this open lawn area and will face the existing buildings.

There are currently four, two-story buildings on the site, with a total of 44 apartments. The buildings all face west. The new building, which will have 12 units and be similar in style and appearance to the existing buildings, will face east and be situated adjacent to the existing parking area, located along the westernmost border of the property. According to the minutes of the Nov. 16, 2011 Planning Board, William Hamilton, a New Jersey-licensed planner, speaking on behalf of the applicant, stated "that there would be no negative impact whatsoever resulting from the proposal, since the changes were made to the interior of the site and would not be visible from surrounding properties." The existing buildings are staggered on the property that, the board noted, is nearly twice the size required by code.

There will also be an affordable housing unit created in an existing building.

The plan includes drainage improvements that will reduce the amount of runoff from the site; new fire hydrants; additional handicapped parking spaces, additional sidewalk ramps and other enhancements.

According to Lyn Beer, the borough's land use administrator, the borough recently received the developer's agreement for the project. Once that is executed, the Mayor and Council need to approve it, which she said, was "pro forma" since it will have already been approved by the Planning Board. Beer said the paperwork won't be completed until sometime in March and that there is no timetable as yet for the construction phase of the project.

Email: burger@northjersey.com

Continued here:
New building approved at Ridge Manor Apartments in Park Ridge

WASHINGTON - Construction of multifamily units will lead the U.S. building industry again this year, allowing housing to contribute to growth for the first time in seven years, according to economists Michelle Meyer and Celia Chen.

Work will begin on about 260,000 apartment buildings and townhouse developments in 2012, up 45 percent from last year and the most since 2008, according to Meyer, a senior economist at Bank of America Corp. in New York. Chen, an economist at Moody’s Analytics Inc. in West Chester, Pa., is even more optimistic, projecting a record 74 percent jump to 310,000.

Home ownership rates, which have declined to the lowest levels since 1998, may keep dropping as the foreclosure crisis turns more Americans into renters. In addition, household formation will probably accelerate as an improving economy and growing employment embolden more people to stop sharing residences and strike out on their own.

“Given the ongoing shift from owning to renting, there is increasing demand for multifamily construction,” Meyer said in an interview. “Foreclosures are transitioning people out of ownership.”

Japan Contracts

Japan’s economy shrank an annualized 2.3 percent in the fourth quarter, more than economists estimated, as slumping exports undermined a recovery from last year’s record earthquake, other data showed Feb. 13.

The projected increases in U.S. multifamily construction extend gains in that began with a 6.8 percent increase in 2010 and a 54 percent surge last year to 178,300 units, according to figures from the Commerce Department. That portion of the market reached a record-low of 108,900 units in 2009 after declining for four consecutive years.

By contrast, starts on single-family homes fell last year to 428,600, the fewest in five decades of data. Bank of America’s Meyer projects single-family construction will grow 5 percent this year.

Federal Reserve Chairman Ben S. Bernanke last week highlighted the weakness in housing as limiting the economic expansion that began in June 2009.

Bernanke’s View

“The state of the housing sector has been a key impediment to a faster recovery,” Bernanke told the annual convention of homebuilders in Orlando, Florida, on Feb. 10. “Homebuilding remains depressed in most areas,” he said. “In contrast to the situation for owner-occupied homes, rental markets around the country have strengthened somewhat. Rents have been increasing and the construction of apartment buildings has picked up.”

A lack of investment in residential real estate subtracted 0.03 percentage point from economic growth last year, the smallest decline since the industry last expanded in 2005.

A report later this week may show housing starts opened the year on a positive note. Builders broke ground on 675,000 houses in January, up 2.7 percent from the prior month, according to the median forecast of economists surveyed by Bloomberg News before Commerce Department data on Feb. 16.

One reason why multifamily units may rebound faster than single-family houses is the drop in demand. The homeownership rate fell in the fourth quarter to 66 percent, according to Commerce Department data. It peaked at 69.2 percent in the second quarter of 2004 and fell to a 13-year low of 65.9 percent in the second quarter of 2011.

More Foreclosures

An increase in foreclosures may push the rate down even more. Lenders had slowed the pace of home seizures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. That delayed the clearing of the market necessary to any recovery and increased demand for rental units.

The rental vacancy rate fell to 9.4 percent in the last three months of 2011 from 9.8 percent in the previous three months, according to data from the Census Bureau. It reached a nine-year low of 9.2 percent from April through June of last year.

Rental payments climbed 2.5 percent in 2011, the biggest gain since 2008, Labor Department figures showed.

Apartment real estate investment trusts such as AvalonBay Communities Inc. have profited from the turn to rentals. It’s up 235 percent since its recession low on March 2, 2009, through Feb. 10. During the same period, the Standard & Poor’s 500 Index is up 92 percent.

Strengthening Demand

“Apartments should benefit once again in 2012 from a combination of gradually improving labor market, a weak for-sale market, favorable demographics and modest levels of new supply,” Tim Naughton, chief executive officer at AvalonBay, said on a Feb. 2 earnings call. “We expect that demand will outpace supply again this year, which would propel operating performance and result in another strong year for AvalonBay.”

The jobless rate dropped to 8.3 in January, the lowest level in three years, and employers in the world’s largest economy add 243,000 workers to payrolls, according to a Labor Department report this month.

The improvement will contribute to an increase in the number of households being formed, further stoking demand for rental housing, according to economists like Patrick Newport at IHS Global Insight in Lexington, Mass.

“We will see a surge in household formation because of pent-up demand as people move away from their parents,” Newport said. “We will see a pickup in housing where there is a much stronger pickup in multifamily.”

IHS forecasts 1.5 million households will be formed in the 12 months through March 2013 from an estimated 972,000 in the year through March 2012.

Read the original post:
Multifamily buildings to lead U.S. construction gains

Tuesday, February 14, 2012    Last updated: Wednesday February 15, 2012, 10:47 AM

Hackensack officials are right to be extra careful about making sure the city's many parking garages are not in danger of falling down.

After the collapse of a parking garage at a high-rise apartment building on Prospect Street a year and a half ago, officials asked operators of 64 similar garages in the city to inspect their facilities and to document the structural integrity of their garages through an engineer's report. The owners of an office building at 5 Summit Ave. responded with a letter from an architect, not an engineer, that said all was well.

That would normally seem to be good enough.

But in the aftermath of a major garage collapse, it wasn't.

After doing its own inspection, the city shut down the two-story garage underneath the two-story office building at the corner of Summit Avenue and Essex Street. A sign this week across an entrance said simply, "Offices open, parking lot under construction."

Building manager Marjorie Reilly was dismayed, telling The Record last week that she was "baffled" by the city's actions, adding, "We had an engineer come in, and he said there were no unsafe conditions.''

Not necessarily, say city officials, who said their inspection found cracked concrete walls and rotting support beams. In fact, the city says one beam was so weak that an engineer was able to put his hand right through the steel.

The city was able to take the action it did at 5 Summit through an ordinance adopted last November. That measure did a number of things, including giving the city the power to take building owners to court if they didn't repair and maintain their parking garages. In this case, the inspection and subsequent closing of the garage came after the city issued the building management a summons.

The parking garage collapse at the 18-story Prospect Towers on July 16, 2010, occurred when a 20-foot-long steel and plexiglass canopy near the building's entrance fell and two floors of the garage caved in. It was amazing and fortunate that no one was injured. Still, more than 300 residents were displaced for months, not moving back in until December of that year.

That collapse spurred the city to have owners routinely inspect their parking garages. Not surprisingly, some owners complained about the cost, but the case at hand proves the city was right. Its methods have closed an unsound garage until it can be repaired. That is an inconvenience, to be sure, to employees and customers of 5 Summit Ave., but another garage collapse would be much worse.

Original post:
The Record: Structural integrity

Enlarge image Multifamily Buildings to Lead U.S. Construction Gains

Emile Wamsteker/Bloomberg

New townhouses, built into a rock quarry, stand in the Hovnanian Enterprises Inc. Four Seasons at Great Notch Spa and Club development in Woodland Park, New Jersey.

New townhouses, built into a rock quarry, stand in the Hovnanian Enterprises Inc. Four Seasons at Great Notch Spa and Club development in Woodland Park, New Jersey. Photographer: Emile Wamsteker/Bloomberg

Construction of multifamily units will lead the U.S. building industry again this year, allowing housing to contribute to growth for the first time in seven years, according to economists Michelle Meyer and Celia Chen.

Work will begin on about 260,000 apartment buildings and townhouse developments in 2012, up 45 percent from last year and the most since 2008, according to Meyer, a senior economist at Bank of America Corp. in New York. Chen, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, is even more optimistic, projecting a record 74 percent jump to 310,000.

Home ownership rates, which have declined to the lowest levels since 1998, may keep dropping as the foreclosure crisis turns more Americans into renters. In addition, household formation will probably accelerate as an improving economy and growing employment embolden more people to stop sharing residences and strike out on their own.

“Given the ongoing shift from owning to renting, there is increasing demand for multifamily construction,” Meyer said in an interview. “Foreclosures are transitioning people out of ownership.”

Stocks rose today as Greece approved austerity plans to secure rescue funds. The Standard & Poor’s 500 Index climbed 0.3 percent to 1,346.58 at 10:45 a.m. in New York.

In Europe today, the Confederation of British Industry said the U.K. economy will escape a recession and the recovery will gain momentum this year, avoiding the need for more quantitative easing by the Bank of England.

Japan Contracts

Japan’s economy shrank an annualized 2.3 percent in the fourth quarter, more than economists estimated, as slumping exports undermined a recovery from last year’s record earthquake, other data showed today.

The projected increases in U.S. multifamily construction extend gains in that began with a 6.8 percent increase in 2010 and a 54 percent surge last year to 178,300 units, according to figures from the Commerce Department. That portion of the market reached a record-low of 108,900 units in 2009 after declining for four consecutive years.

By contrast, starts on single-family homes fell last year to 428,600, the fewest in five decades of data. Bank of America’s Meyer projects single-family construction will grow 5 percent this year.

Federal Reserve Chairman Ben S. Bernanke last week highlighted the weakness in housing as limiting the economic expansion that began in June 2009.

Bernanke’s View

“The state of the housing sector has been a key impediment to a faster recovery,” Bernanke told the annual convention of homebuilders in Orlando, Florida, on Feb. 10. “Homebuilding remains depressed in most areas,” he said. “In contrast to the situation for owner-occupied homes, rental markets around the country have strengthened somewhat. Rents have been increasing and the construction of apartment buildings has picked up.”

A lack of investment in residential real estate subtracted 0.03 percentage point from economic growth last year, the smallest decline since the industry last expanded in 2005.

A report later this week may show housing starts opened the year on a positive note. Builders broke ground on 675,000 houses in January, up 2.7 percent from the prior month, according to the median forecast of economists surveyed by Bloomberg News before Commerce Department data on Feb. 16.

One reason why multifamily units may rebound faster than single-family houses is the drop in demand. The homeownership rate fell in the fourth quarter to 66 percent, according to Commerce Department data. It peaked at 69.2 percent in the second quarter of 2004 and fell to a 13-year low of 65.9 percent in the second quarter of 2011.

More Foreclosures

An increase in foreclosures may push the rate down even more. Lenders had slowed the pace of home seizures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. That delayed the clearing of the market necessary to any recovery and increased demand for rental units.

The rental vacancy rate fell to 9.4 percent in the last three months of 2011 from 9.8 percent in the previous three months, according to data from the Census Bureau. It reached a nine-year low of 9.2 percent from April through June of last year.

Rental payments climbed 2.5 percent in 2011, the biggest gain since 2008, Labor Department figures showed.

Apartment real estate investment trusts such as AvalonBay Communities Inc. (AVB) have profited from the turn to rentals. It’s up 235 percent since its recession low on March 2, 2009, through Feb. 10. During the same period, the Standard & Poor’s 500 Index is up 92 percent.

Strengthening Demand

“Apartments should benefit once again in 2012 from a combination of gradually improving labor market, a weak for-sale market, favorable demographics and modest levels of new supply,” Tim Naughton, chief executive officer at AvalonBay, said on a Feb. 2 earnings call. “We expect that demand will outpace supply again this year, which would propel operating performance and result in another strong year for AvalonBay.”

The jobless rate dropped to 8.3 in January, the lowest level in three years, and employers in the world’s largest economy add 243,000 workers to payrolls, according to a Labor Department report this month.

The improvement will contribute to an increase in the number of households being formed, further stoking demand for rental housing, according to economists like Patrick Newport at IHS Global Insight in Lexington, Massachusetts.

“We will see a surge in household formation because of pent-up demand as people move away from their parents,” Newport said. “We will see a pickup in housing where there is a much stronger pickup in multifamily.”

IHS forecasts 1.5 million households will be formed in the 12 months through March 2013 from an estimated 972,000 in the year through March 2012.

To contact the reporters on this story: Robert Willis in Washington at bwillis@bloomberg.net;

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net;

Link:
Multifamily Buildings to Lead U.S. Construction Gains This Year: Economy

Jamaica Plain’s Home for Little Wanderers will soon be a home for just about anyone.

Developer Boston Residential Group has reached a deal to buy the nonprofit child welfare agency’s South Huntington Avenue property, tear everything down and put up an apartment building with as many as 200 units.

“We really like the Jamaica Plain neighborhood and location,” Curtis Kemeny, the company’s CEO, told the Herald. “We like its proximity to the Longwood Medical Area, to Angell Animal Medical Center, the Back Bay and to downtown employers.”

Boston Residential — which redeveloped the former Tower Records building on Newbury Street and created 65 luxury lofts at 285 Columbus Ave. — has started the permitting process and aims to start construction early next year. It’s a $75 million project, including the acquisition.

“It was a very competitive process,” Kemeny said of the negotiations with broker Colliers Meredith & Grew. “We were just glad we came out on top.”

The Home for Little Wanderers put the nearly century-old orphanage building on the block in August and plans to shift operations to its Longview Farm campus in Walpole, where it’s spending $23 million on a school and four new residential buildings.

A spokeswoman for the home, which leases its headquarters space on Huntington Avenue near Symphony Hall, declined comment yesterday.

The JP building was constructed in 1914, but it’s not a historic site or city landmark.

Kemeny said the new building is still in the design stage but would most likely be four or five stories — in line with the neighboring Goddard House and Sherrill House assisted-living facilities.

The apartments, primarily studios and one-bedroom units, will be “very high quality” but not at the same level of luxury as previous Boston Residential projects, Kemeny said, adding that he aims to make 13 percent of the units affordable in accordance with Mayor Thomas M. Menino’s housing preference.

“The general idea is to bring the residential fabric of Jamaica Plain down to this portion of Huntington Avenue toward Longwood,” he said.

Read more:
JP orphanage EYed for housing

Public Private Partnership delivers public art spaces, affordable and market rate housing and public parking in the heart of downtown Silver Spring.

Silver Spring, MD (PRWEB) February 13, 2012

The stars aligned two years ago when developer RST Development and Montgomery County, MD combined forces to launch construction on the Galaxy, a new five-story, 195-unit, mid-rise rental apartment building in downtown Silver Spring, MD. Leased and managed by Hercules Real Estate, the Galaxy’s leasing center was recently opened to prospective residents. A stunning, decorated model apartment is open for touring, public art is dazzling pedestrians and dozens of one, two and two bedroom with den apartments have been pre-leased. The Galaxy brings 82 affordable apartments and 113 market units to this dynamic section of Silver Spring.

“The Galaxy is opening its doors to residents at a very opportune time in the market,” said RST Development Principal, Scott Copeland. “Our location in the core of Silver Spring’s arts district, walking distance to the Metro, has great appeal to the growing number of individuals and families who want to rent in a close-in location. We brought in top local design talent and artists to create a fresh, contemporary design and a decidedly urban feel to this project.”

“The Galaxy team is fulfilling its promise to bring affordable and market rate housing as well as additional parking to downtown Silver Spring,” said Richard Y. Nelson, Jr., Director of the Montgomery County – Department of Housing and Community Affairs. “This public-private initiative demonstrates the opportunity we have for win-win-win developments in Montgomery County. The Galaxy is a win for residents of many income levels, a win for the County in bringing additional parking for a 24-7 neighborhood and a win for a development team that is opening the right product at exactly the right time.”

Galaxy residents will enjoy an abundance of light and air at this stylish addition to downtown Silver Spring. A public plaza greets residents and their guests as they approach the project and a peaceful interior courtyard with benches and sculpture provides for both a quiet visit and allows for tranquil views from balconies and patios. A green roof provides eco-friendly storm water management and solar panels reduce the building’s energy load.

Creating a pedestrian friendly path through the block between 13th Street and King Street, a new Art Walk will offer the opportunity for art installations by local artists. A stunning mural by acclaimed local artist, Martha Jackson Jarvis, greets residents at the entrance to the building.

Downtown Silver Spring combines convenience and extraordinary transportation access with an eclectic mix of dining, shopping, and entertainment. Galaxy residents will have front door access to the free VanGo shuttle service that serves more than two dozen Silver Spring stops, making outings to the many concerts, arts and crafts fairs, farmers market and cultural festivals easy and affordable. The Silver Spring Metro station is close to the project and three bus shelters with real-time schedule information flank the project. Bicyclists will find plentiful storage and the 368-car underground garage provides 208 dedicated spaces for residents as well as car share parking and public parking. A full service concierge and an Onsite Transportation Benefits Coordinator bring convenience and efficiency to life at the Galaxy.

Galaxy amenities include a large, luxurious clubroom with pool table, flat screen televisions and a Wii™ station as well as a cyber café with a Wi-Fi Hotspot. A fully equipped private fitness center sports glass windows to the plaza. Apartments are designed with condo-grade finishes, from custom cabinetry to granite countertops and stainless steel appliances to ceramic floors, full-size washers and dryers, walk-in closets, patios and balconies. Families will enjoy not only the easy walk to local favorite restaurants, grocery stores such as Whole Foods, movies and shops but also the private “tot lot” with creatively designed play equipment.

The Galaxy was developed by RST Development after an extensive property assemblage and is an example of a public private partnership working together for jobs, affordable housing and development. The financing included a tax-exempt bond mortgage of $38.5 million provided by the Montgomery County Housing Opportunities Commission, along with a $5 million loan from the Montgomery County Department of Housing and Community Affairs, from the County’s Housing Initiative Fund. The County also provided a Payment in Lieu of Taxes (PILOT) agreement. The Maryland Department of Housing and Community Development provided Low Income Housing Tax Credits. The 368-space parking garage is the result of a partnership between RST Development and the Montgomery County Parking Lot District, who owned the surface lot that existed prior to development.

The Galaxy team is comprised of top quality firms in the areas of design and construction:

    Clark Realty Builders – General Contractor     A.R. Meyers & Associates Architects, Inc. AIA – Architect     Studio 39 – Landscape Architect     Hartman Design Group – Interior Design     Martha Jackson Jarvis – Mural     Streetsense - Marketing

About Hercules Living

Founded in 1995, the family-owned Hercules Real Estate Services now owns and manages over 40 properties, comprising of over 8,000 units, in six states – Pennsylvania, Maryland, Virginia, North Carolina, South Carolina, Georgia — and Washington, D.C. Approximately 80 percent of Hercules Real Estate’s portfolio is designated affordable under the Low Income Housing Tax Credit program. In little over a decade, Hercules has emerged as one of the leading companies of its kind in the mid-Atlantic and Southeast regions. For more information, please visit http://www.HerculesLiving.com

###

Eric Burka
Streetsense
301.652.9020
Email Information

Read this article:
Galaxy Apartments Open In Downtown Silver Spring, MD

February 14, 2012, 1:36 AM EST

By Bob Willis

Feb. 13 (Bloomberg) -- Construction of multifamily units will lead the U.S. building industry again this year, allowing housing to contribute to growth for the first time in seven years, according to economists Michelle Meyer and Celia Chen.

Work will begin on about 260,000 apartment buildings and townhouse developments in 2012, up 45 percent from last year and the most since 2008, according to Meyer, a senior economist at Bank of America Corp. in New York. Chen, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, is even more optimistic, projecting a record 74 percent jump to 310,000.

Home ownership rates, which have declined to the lowest levels since 1998, may keep dropping as the foreclosure crisis turns more Americans into renters. In addition, household formation will probably accelerate as an improving economy and growing employment embolden more people to stop sharing residences and strike out on their own.

“Given the ongoing shift from owning to renting, there is increasing demand for multifamily construction,” Meyer said in an interview. “Foreclosures are transitioning people out of ownership.”

Stocks rose today as Greece approved austerity plans to secure rescue funds. The Standard & Poor’s 500 Index climbed 0.3 percent to 1,346.58 at 10:45 a.m. in New York.

In Europe today, the Confederation of British Industry said the U.K. economy will escape a recession and the recovery will gain momentum this year, avoiding the need for more quantitative easing by the Bank of England.

Japan Contracts

Japan’s economy shrank an annualized 2.3 percent in the fourth quarter, more than economists estimated, as slumping exports undermined a recovery from last year’s record earthquake, other data showed today.

The projected increases in U.S. multifamily construction extend gains in that began with a 6.8 percent increase in 2010 and a 54 percent surge last year to 178,300 units, according to figures from the Commerce Department. That portion of the market reached a record-low of 108,900 units in 2009 after declining for four consecutive years.

By contrast, starts on single-family homes fell last year to 428,600, the fewest in five decades of data. Bank of America’s Meyer projects single-family construction will grow 5 percent this year.

Federal Reserve Chairman Ben S. Bernanke last week highlighted the weakness in housing as limiting the economic expansion that began in June 2009.

Bernanke’s View

“The state of the housing sector has been a key impediment to a faster recovery,” Bernanke told the annual convention of homebuilders in Orlando, Florida, on Feb. 10. “Homebuilding remains depressed in most areas,” he said. “In contrast to the situation for owner-occupied homes, rental markets around the country have strengthened somewhat. Rents have been increasing and the construction of apartment buildings has picked up.”

A lack of investment in residential real estate subtracted 0.03 percentage point from economic growth last year, the smallest decline since the industry last expanded in 2005.

A report later this week may show housing starts opened the year on a positive note. Builders broke ground on 675,000 houses in January, up 2.7 percent from the prior month, according to the median forecast of economists surveyed by Bloomberg News before Commerce Department data on Feb. 16.

One reason why multifamily units may rebound faster than single-family houses is the drop in demand. The homeownership rate fell in the fourth quarter to 66 percent, according to Commerce Department data. It peaked at 69.2 percent in the second quarter of 2004 and fell to a 13-year low of 65.9 percent in the second quarter of 2011.

More Foreclosures

An increase in foreclosures may push the rate down even more. Lenders had slowed the pace of home seizures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. That delayed the clearing of the market necessary to any recovery and increased demand for rental units.

The rental vacancy rate fell to 9.4 percent in the last three months of 2011 from 9.8 percent in the previous three months, according to data from the Census Bureau. It reached a nine-year low of 9.2 percent from April through June of last year.

Rental payments climbed 2.5 percent in 2011, the biggest gain since 2008, Labor Department figures showed.

Apartment real estate investment trusts such as AvalonBay Communities Inc. have profited from the turn to rentals. It’s up 235 percent since its recession low on March 2, 2009, through Feb. 10. During the same period, the Standard & Poor’s 500 Index is up 92 percent.

Strengthening Demand

“Apartments should benefit once again in 2012 from a combination of gradually improving labor market, a weak for-sale market, favorable demographics and modest levels of new supply,” Tim Naughton, chief executive officer at AvalonBay, said on a Feb. 2 earnings call. “We expect that demand will outpace supply again this year, which would propel operating performance and result in another strong year for AvalonBay.”

The jobless rate dropped to 8.3 in January, the lowest level in three years, and employers in the world’s largest economy add 243,000 workers to payrolls, according to a Labor Department report this month.

The improvement will contribute to an increase in the number of households being formed, further stoking demand for rental housing, according to economists like Patrick Newport at IHS Global Insight in Lexington, Massachusetts.

“We will see a surge in household formation because of pent-up demand as people move away from their parents,” Newport said. “We will see a pickup in housing where there is a much stronger pickup in multifamily.”

IHS forecasts 1.5 million households will be formed in the 12 months through March 2013 from an estimated 972,000 in the year through March 2012.

--With assistance from Alex Tanzi in Washington. Editors: Carlos Torres, Chris Wellisz

To contact the reporters on this story: Robert Willis in Washington at bwillis@bloomberg.net;

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net;

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Multifamily Buildings to Lead U.S. Construction Gains: Economy

BAY CITY — No one was injured, but two families were displaced by a fire that broke out early Saturday morning in an apartment building at 709 Seventh St. on Bay City's East Side.

Robert Phillips, assistant chief of the Bay City Fire Department, said the home and its contents is a total loss.

Phillips said firefighters were called to the blaze at 6:43 a.m. and arrived on the scene minutes later. The initial dispatch call included a mention of people trapped by the fire but everyone was out of the home within three minutes of firefighters' arrival.

Phillips said the cause of the fire is unknown with all options still being investigated. Fire crews on the scene reported the fire may have started on the second floor and later spread to the first. Phillips said the home's older-style balloon-frame construction may have contributed to the spread of the fire.

“Once it gets into the walls and attic it spreads throughout the house due to the balloon-frame construction,” Phillips said. “There are no firestops.”

Neighbor Roxanne Davis, a food service manager at the Bay County Jail, witnessed the fire and listened to the fire department’s radio chatter on her scanner.

“I kept running back and forth to the front of the house (and to the scanner),” Davis said. “I was curious why the (fire department) was still there.”

Davis noted that at first there was no visible smoke or flames but later they began shooting from the roof and windows of the structure.

It took until 9 a.m. to bring the fire under control including a 30-minute period where firefighters had to evacuate the house due to a danger of being trapped by the fire, Phillips said. Bay City firefighters were assisted by the Hampton Township Fire Department. 

Members from the Great Lakes Bay chapter of the American Red Cross provided relief and a Bay Metro bus was called in to act as area for firefighters to warm up due to the cold weather. Fire crews remained on the scene until about 12:30 p.m. with some investigators staying for another hour.

According to Red Cross officials, both families displaced by the fire are now taking up residence with other family members. Emergency Services Program Manager Ryan Manz said he did not know of any charities set up to help the victims of the fire, but said those wishing to help can donate to the Red Cross and designate the donation go to the families affected by the fire. 

He noted that any money above the amount of assistance given to the families involved would go to other families in a similar situation.

The property was valued at $56,000 before the fire, according to Phillips.

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Fire destroys Bay City apartment building Saturday, displaces two families