Housing opens door to hope

Set against a blizzard of bad news these past few months, some good news emerged Tuesday: The number of housing starts jumped in February.

While building last month was still dramatically down from a year earlier, residential construction unexpectedly surged 22 percent from January, offering at least the hope that the housing market will thaw.

“My initial reaction was that the numbers are too good to be true,” said economist Robert Chirinko of the University of Illinois. “I have to wonder if this is a one-time blip from a very low level.”

Starts last month hit an annual pace of 583,000, the first increase since June, according to the Census Bureau. Most of the improvement came from multiunit buildings, mainly apartments. Single-family homes were up just 1.1 percent while multiunit homes soared 82 percent.

And that —- no matter how deep the recession right now —- is a sign that some companies are looking past the current economic chill toward an eventual spring.

“There is talk that maybe the economy won’t get better until 2010, but that is when the new projects will start to come onto the market,” said Alan Wexler, president of DataBank Inc. “For some, there will be a great opportunity.”

Only a few Atlanta builders so far are taking that gamble, he said.

In fact, Dale Henson Associates, an Atlanta-based company that does research for multifamily developers, expects a falloff in local apartment construction this year —- mostly due to funding woes.

Only about 4,000 units are likely to be built in the 11 local counties Dale Henson tracks, senior analyst Robert Ito said. That’s a 45 percent decline compared with the 2005-08 average of 7,289 apartments, the company’s data shows.

But there are some readying a bid. For instance, developers Mark Mechlowitz and Colin Cavill plan in the next 90 days to start work on a 282-unit apartment building in Atlanta’s Grant Park neighborhood. The project will take 16 months to finish, Cavill said Tuesday.

The Atlanta and national economies for five years were lifted by a huge wave of single-family home building. Construction here peaked at more than 50,000 homes annually, but the metro area was then drawing a steady stream of new residents while easy credit was turning many renters into buyers.

Yet eventually, the supply of homes flooded the market. Then, the subprime crisis hit. Financing ebbed and washed away many potential buyers.

Now, builders —- even those who could get financing —- are hanging back, waiting for the unsold homes to be absorbed, said David Ellis, executive vice president of the Greater Atlanta Home Builders Association. “We haven’t seen any real dramatic increase, although I am hearing more and more about better [foot] traffic. There’s nothing yet to say, ‘Wow, the market is taking off.’ “

Typically, late spring is when sales crest, he said. “This buying season is going to be a telling time.”

Eugene James, Atlanta division director for Metrostudy, says some builders have not built a home in two years. So even if the overall market has a huge overhang of unsold homes, they do not.

But that doesn’t mean they will start building. And James warned that one month’s report is no proof that the tide is turning, because the data is based on a small sample.

“The guys on Wall Street eat this stuff up,” he said. “But the margin of error is nearly always bigger than the month-to-month percent change. No one looks at that.”

Yet the government report may hint at the mix of multi- and single-family building to come, said Dan Immergluck, associate professor in city and regional planning at Georgia Tech. “The real gap is on the more affordable multifamily rental side. There is actually a shortage there.”

 Associated Press 
HOUSING STARTS 
New privately owned housing units started: 
Seasonally adjusted annual rate 
Graph compares number of housing starts monthly from Feb. 2008 through Feb. 2009. 
Feb. 2009: 583,000 units* 
*Preliminary
Source: Department of Commerce