By Kevin M
Ominous question, isn’t it? There are all kinds of implications that go with that possibility, and none of them fit neatly within the economic progression of the past 30-40 years when it seemed the entire economy was running largely on the back of the real estate industry. But whether we like it or not, new trends in housing are beginning to emerge, pointing to a future that will likely see more renters—maybe far more—than in the recent past.
Though new construction of residential real estate has been showing definite signs of an upswing in the past few months, the encouraging statistics are far more important for what they hide.
An article last week, Rent Party! Apartments Drive Strong Housing Starts Data (Yahoo!Finance) reports a good news/bad news scenario on new residential construction. The good news: November housing starts are up 9.3% from October, and 24.3% over October, 2010. That’s an impressive turn-around.
But now the not-so-good news: though overall housing starts are up impressively, the stats for 1-4 family homes is actually down, dropping 1.5% from October, 2011.
So if home building is down from last year, what accounts for the increase in new construction? Apartments! Apartment construction (buildings with five or more housing units) are booming while construction of primarily owner occupied single- and small mutli-family homes are stuck at a recession level pace.
The economic implications of this shift are not lost on builders who are moving from the once reliable single family market to apartment construction. They’re on the front lines of the housing market, they see future, and they’re building to prepare for it. Obviously, they see the shift as part of a longer term trend.
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A home mortgage loan is likely the biggest financial investment a consumer will make in a lifetime. Because the majority of mortgage payments will be stretched over a 15 or 30 year period, the actually cost of a home can be astronomical when interest charges are considered. Many new homeowners fail to truly realize that they bought a house for $130,000 and will spend nearly that much in interest charges over the life of the loan. For a $130,000 home, the consumer may spend well over $260,000 when all is said and done. 
Are people still taking adjustable rate mortgages, or ARMs? Apparently so. An article came out last week extolling the virtues of ARM loans, 
I’m one of the rare examples of personal finance bloggers who see the 30 year mortgage as the better option than the 15 year loan for most homeowners. Yes, there are advantages to paying off your mortgage in half as much time, but you still have to deal with the effects of a higher house payment for 15 years, and that’s a long time when life is out there happening. 
Housing prices are lower than they have been in years. Mortgage rates are near all time lows. Housing stats are starting to pick up. The bottom on the housing market is in. Joe Smith around the corner sold his house in three days, and he had four offers (or was it four days with three offers?). Time to buy—and buy quickly! Prices will never be this low—rates will never be this low—the real estate agent said so. Buy, buy, buy!
