Saturday, October 18, 2014
Sluggish Economy Drives Surge in Apartment Construction
http://www.nytimes.com/2014/10/18/business/economy/sluggish-economy-drives-surge-in-apartment-construction.html?ref=economy
This article talks about the effects the sluggish economy has on the demand for homes vs apartments. Its no surprise that more people are renting instead of owning homes. Even though permits for building homes has increased, its still evident that real estate sales haven't really improved in recent months. Even though prices are dropping, experts aren't seeing matching improvement in home building or buying. The article suggests that home values is to blame for this. Despite the dramatic drop in mortgage rates, it is still uncertain that the demand for homes will be greater. Economists say that even with this reduction in mortgage rate some improvement will be seen in the next year or so but even that, it wont be an exciting increase in the purchasing of homes.
What baffles me is the inability for the reduction of rates and prices to influence buyers. Does that mean wages are relatively low?
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I think the low demand for homes is definitely an indication that our economy still has a ways to go. Although the unemployment rate has continued to decrease and mortgage rates have dropped, wages haven't been growing very significantly. This might cause more people to rent instead of own homes. Maybe more people would choose to buy homes if their wages were to increase.
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