The Home Buyer's Korner

Information presented should be used for educational purposes only.

May 4th, 2015

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Construction Spending for March 2015

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Once Again Construction Spending disappoints and housing economists must be living on another planet or they simply never visit Main Street. Housing economists have been overly optimistic for the past six months when it comes to guestimating the health of new construction. Many analysts had estimated that construction spending would come in at a 0.4 percent gain, but the actual result was a 0.6 percent decline! Frankly, I’m beginning to think most high school students could do as good a job at predicting the health and breath of our real estate market and wondering why these analyst are drawing fat paychecks, while those of us on Main Street continue to cut back simply to keep the lights on.

Frankly, I’m beginning to think most high school students could do as good a job at predicting the health and breath of our real estate market and wondering why these analyst are drawing fat paychecks, while those of us on Main Street continue to cut back, simply to keep the lights on!

So far this year construction spending is up 2.0 percent year over year and it still a low bar we have been comparing increase too.  Furthermore, spending is down from February’s annual increase of 2.7 percent and both residential and public building has declined. While we can point to a harsh winter for some of the decline, a basic weakness in the building sector is obviously clear; stagnant wages are choking the life out of the real estate development and no one on Wall Street or in Hollywood East wants to address it.

Residential spending dropped 1.6 percent in March for both single-family and multi-family homes. On top of that, residential construction excluding new homes, which captures the home renovation business also declined after gains in January and February.

Nonresidential private construction was the only bright news received in the report. It advanced 1.0 percent on gains for office, manufacturing, and healthcare sectors.

Public construction was down for a third straight month to its lowest level since February 2014. State and local government spending, the much larger portion of public construction, dropped in both February and March while Federal Government construction retreated after an 8.6 percent surge in February.

Keep in mind, now would be a great time Congress to implement a massive building program, which is sorely needed to repair our roads and bridges. If they did, the cost could be borrowed at ultra-low interest rates and would breathe life into Main Street and your pocketbook. Unfortunately, Congress is owned by millionaires or at the least members are drawing $174,000 annual paychecks and they are all more concerned about doing Wall Street’s bidding with an eye on becoming lobbyist in the near future and increasing their annual payrolls 10 fold.

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