Apartment Surge

“I forgot to mention it’s on the third floor.” My sister conned me into helping her move into an apartment several years ago and didn’t tell me we’d have to carry her oversized couch up three flights of stairs. I smashed my hand carrying it but eventually got my revenge. She later moved out and bought a house, but today’s young people prefer staying in apartments.

Several reports in the last few days show improvement in the housing market. But, the most interesting report was the one that pointed to young people preferring apartments and condos to houses. This might suggest a cultural change among Americans.

The US Census Bureau reported that more multi-family (apartment/condo) units are being constructed now than single-family houses for the first time since the early 1970s. In the last year, multi-family (apartment/condo) construction starts increased by about 25%. In comparison, construction starts for single-family houses decreased by about 25%. Young families aren’t moving out of their apartments, so more apartments are needed.

Demand for apartments and condos from younger generations is strong and should continue to support construction spending in the coming months. The housing market is a solid part of our economy.

According to the US Bureau of Economic Analysis, Americans’ spending on housing represents almost a fifth of our total US economy. My main point is that the millennial demand for apartments and condos will continue to give the economy a needed shot in the arm through construction activity in the coming months.

This helps investors in two ways. One, with more apartments coming online, it should drive down rent prices by the end of the year, which will help inflation numbers. Secondly, as rent prices start going down, it could give the Federal Reserve a good reason to continue pausing or lowering rates.

Housing expenses are a significant shelter factor in calculating inflation. When rent prices start falling, it will be harder for the Fed to justify keeping interest rates so high.

A few years ago, I tried to get revenge on my sister. The coroner position in the town we both lived in was being voted on, and there was an option for a write-in candidate. I wrote in my sister’s name and started a social media campaign to get her elected. She lost the election, but it was close enough to scare her a good scare. Maybe next time, she will have someone else move her.

Have a blessed week!


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