Construction spending down, but not out … yet
Source: http://blogs.moneyandmarkets.com/blog/interest-rate-roundup/0/0/construction-spending-down-but-not-out--yetPosted on Monday, January 5th, 2009 | In Economics
PThe latest figures show construction spending was down, but not out, in the month of November. Total spending declined 0.6% against market expectations for a decline of 1.4%. October’s decline was also revised to just -0.4% from a previously reported drop of -1.2%.brbrThe residential market continues to be a lead anchor, with private residential spending down 4.2% — the biggest decline since July’s -6.2% reading. Private nonresidential spending, on the other hand, increased 0.7% after a 0.4% decline in October. Within the private nonresidential sector, spending on lodging was up 0.7%, spending on office property rose 0.9%, spending on transportation projects jumped 3.2% and spending on power facilities climbed 5.3%.brbrThe problem? This nonresidential strength simply isn’t going to last. After all, as the A href=http://www.nytimes.com/2009/01/05/business/05real.html?hpNew York Times noted yesterday/A, vacancy rates are rising, rents are falling, and commercial real estate financing conditions are much tighter now than they’ve been in years. A brief excerpt:brbrVacancy rates in office buildings exceed 10 percent in virtually every major city in the country and are rising rapidly, a sign of economic distress that could lead to yet another wave of problems for troubled lenders.brbrWith job cuts rampant and businesses retrenching, more empty space is expected from New York to Chicago to Los Angeles in the coming year. Rental income would then decline and property values would slide further. The Urban Land Institute predicts 2009 will be the worst year for the commercial real estate market since the wrenching 1991-1992 industry depression./P
Last 5 posts by Mike Larson
- Tightening Begins Overseas; Here? Not So Much … - October 9th, 2009
- Sayonara Treasury Bubble! - May 1st, 2009
- Straight talk on the Obama mortgage plan - February 20th, 2009
- Early results show dismal holiday retail sales - December 26th, 2008
- November new and existing home sales both fall - December 23rd, 2008
Chicago, Depression, Economics, Los Angeles, New York, real estate financing conditions;, Real Estate Market, Urban Land Institute;
 About Mike Larson (http://blogs.moneyandmarkets.com/blog/interest-rate-roundup)
Mike Larson joined the company in 2001, and has more than 10 years of experience researching and writing about personal finance, investing, and the housing and mortgage industry. In 2003, Mr. Larson was named associate editor of the company’s monthly Safe Money Report. In this role, he is responsible for writing and editing as well as analyzing trading opportunities for clients. Mr. Larson is also a regular contributor to the company’s daily e-letter, Money and Markets and editor of three of its premium trading services. Before joining Weiss Research, Mr. Larson was a personal finance reporter for Bankrate.com, where he wrote extensively on mortgage lending, banking, residential real estate, and Federal Reserve Board policy. His responsibilities included analyzing economic data and interest rate trends for a weekly column and developing rate forecasts for a regular index feature. Previously, Mr. Larson held positions at Bloomberg News and the Boston Herald. Recognized as an interest rate and mortgage market expert, Mr. Larson’s views have been quoted in numerous publications nationwide, including the Washington Post, Chicago Tribune, Dow Jones Newswires, Associated Press, Reuters, CNNMoney.com, Sun-Sentinel, Tampa Tribune and the Palm Beach Post. His in-depth analysis of the housing and mortgage market and accurate forecast of the subprime crisis has lead to frequent appearances on CNBC, CNN, Fox Business News, and Bloomberg Television, as well as many nationally syndicated radio shows. Mr. Larson’s understanding of the U.S. real estate market has also been recognized overseas, having recently been featured in a documentary on the subject produced by a Barcelona-based television station. In addition, his writing has been acknowledged by both the National Association of Real Estate Editors and the Massachusetts Press Association. Among the first analysts to call the housing slide, Mr. Larson’s policy paper, “How Federal Regulators, Lenders and Wall Street Created America’s Housing Crisis: Nine Proposals for a Long-Term Recovery,” received broad media coverage following its July 2007 submission to the Federal Reserve and FDIC. In the paper, Mr. Larson accurately predicted the long-term impact of the deepening subprime mortgage crisis on the broader economy that the nation faces today. Mr. Larson holds B.A. and B.S. degrees from Boston University. |
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