Building Boom Goes Bust

[Jun 10, 2007.]

A report from the Census Bureau indicates all is not well in the construction industry—one of the most important sectors in the nation's economy. While housing starts did increase in April, building permits dropped a significant amount-nearly nine percent. The issuance of building permits is considered to be an indication of a builder's confidence in the housing market.

For instance, an economist with Global Insight, Patrick Newport, was quoted as saying, "Permits are a much better indicator of the state of the housing market than starts are. The margin of error in the permits data is much lower and it's not affected by weather."

Meanwhile, the housing inventory in the metropolitan area of New York appears to be holding steady. Within the city, the number of available properties is down, but in suburban regions, the housing stock has grown.

While real estate prices are not fairing well nationally, they are rising in Manhattan because of the high demand for property. In fact, there appears to be a building and co-op conversion boom which is keeping the New York housing market humming. Analysts say, though, if there's a sharp downturn in demand, the housing inventory could accumulate fairly quickly.

Meanwhile, some financial experts are warning against opening up new home equity lines of credit. The interest on such loans can be high; you could end up owing more than you own; and your home value might not appreciate as fast as you'd like it to. Given all these factors, home equity loans do not appear to be as attractive as they used to be.

With the housing market giving mixed signals, caution might be the code word of the day. While it still may be possible to make good money in real estate, get-rich-quick-through-property schemes may not work anymore.

Julie Ann Amos
June 10th 2007

More Information:

• Getting A Larger House – What Type Of Mortgage?
  Today, if you want a larger house, there are a number of ways that you can do it. In days gone by, however, about the only way you could do this was if you got a better job, received an inheritance, or to borrow money from a relative.


• Could A Cash Out Mortgage Be For You?
  If you have ever wanted to get hold of some of that cash value that is tied up in your home's equity, then it is possible that a cash out mortgage may be your ticket. These mortgages are becoming popular lately because they enable people like you to get the access they want.

• Real Estate "For Sale" Signs Mushroom
  If you're in the market for a house, you may be in luck this summer. A new report indicates that the number of houses for sale in many big cities rose in April. The flood of homes may be an indication that the nation's real estate market is still in trouble and may also be a sign of things to come in June and July. [June 7th 2007]


• Mortgage Rates on the Rise
  Freddie Mac is reporting that mortgage rates are on an upward spiral once again. The rapid rise signals that the Federal Reserve Board believes that inflation continues to be a problem. It could also indicate tough times ahead for those in the market to buy a new house. [June 3rd 2007]


• Inflation Still a Concern
  Inflation remains a key concern for economists, if the price of bonds is any indication. [June 3rd 2007]