1 March is bringing changes to all homeowners who are undertaking significant building or renovation work.

Changes to the Building Act mean that from the start of next month, all critical building work must be done or supervised by licensed building practitioners (LBPs). This type of work includes foundations, framing, roofing and cladding in residential homes, as well as active fire safety systems in small-to-medium-sized apartment buildings.

"For homeowners, the change means they must make sure that any work done is handled by an LBP, and they submit a copy of the LBP memorandum with their building consent application," says Manager Customer and Regulatory Services Simon Pickford.

"The Department of Building and Housing made these changes in the Building Act 2004 to encourage better design and construction.

"When you're looking at building or renovating, the first question a homeowner must ask is if the person they are working with is an LBP."

Professions required to become LBPs include designers, carpenters, roofers, external plasterers, bricklayers and block layers. Registered architects, chartered professional engineers and plumbers are already deemed to be LBPs.

An exemption will be available to owner-builders (DIYers) when the Building Amendment Bill No. 3 has been passed into law.

For more information on the LBP scheme and on how to find a licensed building practitioner, click on the links at the bottom of this page.

How does the LPB scheme affect the building consent process?

From 1 March:

When you submit your building consent application, you will need to include a memorandum (certificate of work) from an LBP certifying that the design work complies with the Building Code. Otherwise, your application will not be accepted.

Restricted work cannot start and inspection will not be accepted until the Council has been advised, in writing, of the relevant LBP who will be doing the work.

When your building work is completed, you will need to include the memorandum (record of building work) from your trade LBPs with your application for a code compliance certificate (CCC). Otherwise, your CCC may not be issued.

Read the original post:
Building Act changes coming for homeowners

The long downward slide in housing construction may be coming to an end.

While the rate of new building remains well below prerecession levels, construction permits for new housing increased slowly, but steadily, most of last year.

Not only is the housing market improving; it is also changing, with fewer single-family homes being built, and more apartment buildings.

Prior to the housing collapse, five to six times more single-family homes than apartment buildings were built each year. Today, the ratio is about three to one. If the trend continues, the housing market may be taking a radically different shape.

Housing has been a major drag on the economy since it collapsed. From early 2006, when the market peaked, to June 2009, when the recession ended, the pace of housing construction fell 75 percent.

In 2009, the number of new single-family homes completed dropped to 500,000, from a high of 1.9 million in 2006. For all housing units, including single-family and multiunit dwellings, the fall was similarly dramatic - from 2.2 million to 800,000.

Trends in housing construction are reflected in the interplay between new building permits and completed units. The number of permits issued approximates the number of new homes planned. But not all permits lead to completed houses. Even in the best of times, some buildings never get started and others are delayed.

When the market is booming, the number of permits is slightly above the number of units completed each month. This indicates confidence in future demand for homes.

The picture is different in a crisis. From mid-2006 to the end of 2009, applications for building permits dropped precipitously. Since some construction was already under way when housing collapsed, it made sense to complete many of those buildings. As a result, the number of permits issued fell below the number of housing units completed. This is a sign that builders are cutting back on planned construction, a symptom of oversupply in the market.

The slide in home building moderated at the end of the recession, but it has not yet recovered. Now the tide seems to be turning.

As of the end of last year, the number of housing units completed no longer exceeded the number of permits issued. Builders are applying for new permits and completing projects at about the same rate.

This rate is much lower today than it was prior to the recession, but we are no longer in crisis mode.

Housing construction has finally started to add to the overall growth in output - another sign of normalcy. New residential investment contributed positively, if modestly, to economic growth during the last three quarters of 2011. We have not seen growth of this kind since 2005.

Most of the increase in housing permits came from the construction of new apartment buildings. The number of new permits for multiunit structures has doubled since mid-2009, and permits exceed completions by a healthy margin. Nevertheless, apartments, like single-family homes, are still being built at a lower rate than prior to the recession, with about 150,000 multiunit buildings completed last year, compared with 280,000 units in 2006.

By contrast, the much larger single-family segment of the housing market still hasn't stabilized much. The number of new permits for single-family homes has stayed virtually constant since mid-2009, and the number of homes completed still slightly exceeds permits. This implies that builders are planning to build even fewer houses than they're building now.

Part of the reason is the large number of single-family homes already on the market. In December 2011, 2.1 million single-family homes were for sale - only slightly fewer than the 2.2 million available during the boom year of 2005. Back then, business was brisk. The demand today is much lower.

Housing construction may have turned the corner, but the new road appears to be headed for a high-rise apartment complex, not a neighborhood of neatly trimmed lawns.

Polina Vlasenko is a research fellow at the American Institute for Economic Research.

See the article here:
Housing market is coming back in a different form

The Charlottesville City Planning Commission approved initial plans this week for a two-phase construction of a 300-unit apartment complex on the corner of Arlington Blvd. and Millmont St, near the Barracks Road Shopping Center.

Peak Campus Development, the company heading the project, hopes to begin construction this May, Peak Campus Development spokesperson Jeff Githens said.

The complex will be built in two phases. The first calls for the demolition of existing physical structures, to be replaced by a 230-unit complex with an attached parking garage. In the second stage of construction, the developers plan to build 70 additional residential units. When complete, the development will house nearly 600 residents, likely graduate students.

“We’re proposing to build a Class A apartment building with high conductivity to its surroundings,” Githens said. “[The building] is optimally situated between shopping centers in Charlottesville for access to both retail and to U.Va.”

Three medical offices currently occupy the space: Jefferson Trial Behavioral System, Region Ten Community Services and the University of Virginia Psychology Department.

The first phase of construction will displace the Jefferson Trial Behavioral System and Region Ten Community Services. Offices rented by the University Psychology Department will remain occupied until August 2014, when the second phase of construction begins.

Peak Campus Development aims to create “better pedestrian interaction with the building and [accommodation for] additional entrances,” and “improve the façade appearance at street level.”

A required traffic survey showed the effect of the project on traffic patterns near the complex.

“[Findings] indicate that the project will have a lower impact on area traffic than the existing use,” said Ebony Walden, a project planner for Charlottesville’s Department of Neighborhood Development.

The project plans are designed to Leadership in Energy and Environmental Design (LEED) standards, Walden said. The complex will also feature bicycle storage and will be located along a bicycle path and a bus route.

“Alternate transportation is important to us and to the city,” Githens said. “We want to be as environmentally friendly as we can to optimize the use of utilities.”

Walden said she hopes the development will be an asset to the city.

“I hope it will encourage walkability, increase commercial activity in the Barrack’s Road Shopping Center and provide new housing options to Charlottesville’s students and residents,” Walden said.

Peak Campus Development also plans to make a donation of $360,000 to the City’s housing fund to promote affordable housing initiatives throughout Charlottesville.

Read more here:
Apartments near Barracks Road likely to house nearly 600 graduate students; construction to begin this May

by DEREK KRAVITZ - Feb. 16, 2012 07:00 AM
AP Real Estate Writer

WASHINGTON - -- Construction of single-family homes cooled off slightly in January after surging in the final month last year. But a rebound in volatile apartment construction kept builders busy and pushed housing starts to their highest level in more than three years.

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 the highest level since October 2008.

Construction began on 508,000 single-family homes last month. That's a 1 percent drop from December and the first decline in four months.

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

Apartment building, a more volatile category, jumped 14.4 percent. Building permits, a gauge of future construction, rose 0.7 percent.

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.

Still, 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 only 428,600 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.

Read the rest here:
US housing starts rise modestly to start new year

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