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Home construction weak both locally, nationally

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Home-building permits filed in the Indianapolis area fell by more than 30 percent in January compared with the same month in 2010, mirroring a national trend showing weak demand for new single-family houses.

In the nine-county Indianapolis region, the number of building permits filed last month fell to 198, a decline of 31 percent from January 2010, according to the latest permit data from the Builders Association of Greater Indianapolis.

Home-building activity was down in every area county last month except Johnson, where 25 building permits were filed, an increase of 25 percent from the same time last year.

Just 30 building permits were filed in Marion County, a decrease of 25 percent.

Home construction was strongest in Hamilton County, though the number of building permits fell by 20 percent, to 90.

Housing construction actually rose nationally last month at the fastest rate in 20 months because of a big spike in apartment building. But construction of single-family dwellings declined.

Builders broke ground on new homes and apartments at a seasonally adjusted annual rate of 596,000 units, a 14.6-percent jump from December.

Single-family homes, which make up nearly 70 percent of new construction , fell 1 percent, to an annual rate of 417,000 units. Apartment construction skyrocketed 80 percent, to an annual rate of 171,000 units.

Building permits, an indicator of future construction, fell more than 10 percent nationally in January.

Last year, U.S. builders worked on 587,600 new homes, just barely better than the 554,000 started in 2009. In a healthy economy, builders start about 1 million units a year. The housing industry is coming off the worst two years for home construction dating back to 1959. Central Indiana home bulders also suffered through two tough years.

More than a year after the recession ended, the housing market is still struggling.

Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.

The flat-lined housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

The trade association reported Tuesday that its index of builder confidence remained stuck at 16 in February, where it has been for four straight months. A reading of 50 signifies a positive outlook about the future.
 

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  • home construction
    Construction spending, an important driver of the economy, has been in freefall for months. The construction sector has gotten so weak, spending in Feb. reached its lowest level since the fall of 1999. Foreclosures and short sales are the primary culprit, as they stifle new home building, the traditional driver for the entire sector . The proof is here: Construction sector continues to hold back more robust recovery
  • I Agree with Joe!
    There have been 400 new apartments proposed for downtown indy over the past week and the Riley area is building three new apartment complexes... More people were buying homes than could afford them so home sales may be slow for decades to come. Almost 70% of our pop was owning homes... That is very impressive, but also what drove us into this whole problem. If home sales sky rocket again then we are going to be in a world of hurt.
  • Wrong indicator
    Stop citing new home construction as a sign of the economy. That is the exact issue that got us into this mess. We put 'em up as quick as we can and then have to sell them off to people that can't really afford a huge house. Our existing housing stock can support our population, what will happen when we build out? I know it seems so far away, but at the current rate we will eventually have no room. Development in many areas has grown twice as fast than population if not more. What do we expect to happen? This mentality of more is more can't be sustained. I would consider a home remodel more important than a new home. Reinvestment in a community shows signs of improvement. Building new homes shows that we are too weak to support a population for a given period of time.

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  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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