Getting to the bottom of headlines and statistics can sometime prove to be quite the laborious endeavor.
For instance, in this morning’s Drudge Report, one of the headlines placed at the top of the page was “Housing Starts Unexpectedly Jump…”; the use of the ellipsis should prompt the reader “to do some further research.”
However, the unexpected increase is due solely to new construction on apartments for rent in the Northeast; single-family homes starts sank 4 percent to their lowest level in 17 years amid continued concerns about rising foreclosures, higher mortgage rates and declining property values.
Furthermore, the disproportionate increase that buoyed the overall housing start rate was caused by a new construction code that took effect in New York City on July 1. The new codes, the first modernization of the Building Code since 1968, are based on international models and designed to improve safety for the public and workers.
Why would there be such a rush for building permits on multifamily buildings during the month prior to the enactment of the first new Building Code since 1968? Precisely because if a building permit is obtained prior to July 1st, the new codes do not apply. Thus, developers need not abide by costly fees, regulations and third-party inspections.
Moreover, apartments in New York City command some of the highest rents in the nation and will continue to grow.
Thus, perhaps it would be clearer if the Drudge Report headline was not “Housing Starts Unexpectedly Jump…”, but rather “NYC Developers’ Rush to Avoid New Building Codes Distorts Housing Starts Report.”
For an accurate assessment of single-family home starts, check out this story from Inman.