Weekly Market Insight . Multi Housing Permits, 3-Month Moving Average; Structures with 5+ Units, Seasonally Adjusted Annual Rate . 01/09/12

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Multi Housing Permits, 3-Month Moving Average
Structures with 5+ Units, Seasonally Adjusted Annual Rate
January 09, 2012
Sources: U.S. Census Bureau, Grubb & Ellis
Residential building permits in structures with five or more units totaled 223,000 units in November at a seasonally adjusted annual rate. This was the highest level since October 2008, the month following the bankruptcy of Lehman Brothers. The three-month moving average, which smooths out volatility in the monthly data, also points to an upward trend, totaling 191,000 in November. Builders are taking advantage of strong absorption as the ongoing slide in home prices and the high rate of foreclosures make renting a more attractive option for many households or perhaps the only option. Despite rising activity, permits are just a fraction of the levels preceding the Great Recession. The apartment vacancy rate ended the year at 5.2 percent according to Reis, the lowest level in a decade. This comes just two years after vacancy hit an all-time peak of 8.0 percent in the fourth quarter of 2009 shortly after the recession officially ended. Look for vacancy to move lower in 2012 though at a slower pace as completions gradually ramp up. The apartment leasing market is expected to remain tight for at least two more years until home sales pick up, relieving pressure on demand, and apartment completions increase further, adding to supply.
Robert Bach, Senior Vice President, Chief Economist, has 30 years of professional experience in real estate market research, consulting and city planning. His commentary on the real estate markets is provided here on a weekly basis.

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Robert Bach
Senior Vice President, Chief Economist

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© 2012 Grubb & Ellis, all rights reserved.

About CRE Northwest

Specialist in office & investment real estate in Seattle & the Eastside
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