Housing Starts Rise In November; But With A High Margin Of Error
The number of single-family Housing Starts increased in November, adding 30,000 units as compared to October.
The Census Bureau defines a “housing start” as a home on which construction has started.
November’s starts represents a 7 percent increase from the month prior. However, if you see the Housing Starts story online or in the papers, you’ll notice that the press is calling the market gain at 4 percent.
So which result is right? The answer is both.
The government’s monthly Housing Starts data is published as a composite report; lumping activity among 3 separate housing types into a single, group reading.
The 3 housing types are:
- Single-family homes (i.e. 1-unit)
- Multi-unit homes (i.e. 2-4 units)
- Apartments (5 units or more)
The group reading is a fair description of the market and it’s easy-to-understand. As a result, it’s what the press tends to report. However, for home buyers in the North Georgia Mountains, it’s the single-family category that’s most relevant.
The reason why single-family homes accounted for 84% of November’s Housing Starts is because that’s the type of home that most buyers buy. Few purchase 2-4 unit properties, and even fewer buy entire apartment complexes.
That said, it’s possible that November’s Housing Starts data is wrong. Within the press release, the government placed an asterisk next to the data, indicating that the figure’s margin of error exceeds its actual measurement.
Against a 7 percent gain, the reported margin of error is 13.5%. There is no statistical evidence, therefore, to prove the actual change was different from zero.
If Housing Starts did fall in November, it will help to reduce the Blairsville and Blue Ridge housing inventory, which will, in turn, help keep home prices high. For home sellers, this could mean good news. Fewer homes for sale increase competition among buyers.
Why Builder Confidence Surveys Matter To Buyers Of New Homes
Home builder confidence is holding firm this month, according to the National Association of Home Builders.
The group’s monthly Housing Market Index survey posted 16 for December. That’s the same value as from November. It’s also equal to this 2010′s average HMI reading.
HMI is scored on a scale of 1-100, and is a composite of 3 separate home builder surveys measuring single-family sales; projected single-family sales over the next six months; and prospective buyer foot traffic.
The results of the 3 surveys were as follows:
- Single-Family Sales : 16 (unchanged from November)
- Projected Single-Family Sales : 25 (unchanged from November)
- Prospective Buyer Foot Traffic : 11 (from 12 in November)
Values of 50 or better indicate favorable conditions for home builders. Values below 50 indicate unfavorable conditions.
In other words, although improving, conditions for home builders remain less from excellent. Home buyers in Blairsville and Blue Ridge, GA. can use this to their advantage. When builders feel pressure from the market, they’re more likely to offer discounts.
On the other hand, job growth is returning, the economy is expanding, and mortgage rates are rising. These 3 factors are thought to boost housing markets. So, despite an unfavorable HMI reading, home builders might still be less willing to “make a deal”; holding out for a better 2011.
November’s strong Housing Starts data supports that line of thinking.
If you’re buying a newly-built home in the North Georgia Mountains area , or expect to buy sometime in 2011, keep an eye on home builder sentiment surveys. The better the builders feel, the more you may be asked to pay to buy your next home.
Housing Starts Better Than The Headlines Would Have You Believe
Newspaper stories can be misleading sometimes — especially with respect to real estate. We saw a terrific example of this Wednesday.
A “Housing Start” is a privately-owned home on which construction has started and, according to the Commerce Department’s October 2010 data, Housing Starts data dropped by nearly 12 percent as compared to September.
The media jumped on the story, and its negative implications for the housing market overall.
A sampling of the headlines included:
- Housing Starts Plunge: Market’s ‘Pulse is Faint’ (WSJ)
- Housing Starts Tumble (Reuters)
- Housing Starts Sink 11.7 Percent In October (NPR)
Although factually correct, the headlines are misleading. Yes, Housing Starts fell sharply in October, but if we strip out the volatile “5 or more units” portion of the data — a grouping that includes apartment buildings and condominiums — Housing Starts only fell 1 percent.
That’s a big difference. Especially because most new construction buyers in Hiawassee, Blairsville, Blue Ridge and around the country don’t purchase entire condo buildings. They buy single-family residences.
As an illustration, 84% of October’s Housing Starts were single-family homes. The remaining starts were multi-units.
This is why the headlines don’t tell the whole story. The market that matters most to buyers — the single-family market — gets completely glossed over. The Housing Starts reading wasn’t nearly as awful as the papers would have you believe. Furthermore, it’s never mentioned that single-family Housing Permits climbed 1 percent last month, either.
According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Therefore, we can expect December’s starts to be higher, too.
2010 Fannin County Visitor’s Information Guide
The 2010 Fannin County Visitor’s Guide
The Fannin County Chamber of Commerce along with Southwinds Technologies, Inc. have done a phenomenal job in creating the Fannin County Visitor’s Guide. Be sure to visit the Chamber’s website for great information about virtually everything you would need in Blue Ridge, GA. and the surrounding areas within Fannin County.
October 2010 Gilmer County Residential Market Report
Gilmer County Residential October 2010 Market Report
Leaves aren’t the only thing falling in Gilmer County. Much like that of the surrounding counties in the North Georgia Mountain Real Estate Market, the Median Sold Price for Homes Sold in Ellijay, GA. has dropped 10% from September of 2009. The Median Sold Price for residential sales in Gilmer county dropped $15,500 to $137,500. The Median For Sale Price for Gilmer County also dropped year over year 7%, a change of $15,000 to $199,900. What is more staggering than that is the fact that there were 13 fewer homes sold in September this year, than the 35 Homes Sold In Gilmer County last September. The number of Homes Under Contract in Ellijay were also down 8%, down to 37 Pending Sales from 40 a year ago.
The number of New Listings For Sale In Ellijay being offered on our MLS was down 10%. The total number of Homes For Sale in Gilmer County was down 5% from September 2009 to a total of 819, a change of 41 homes. The Average Days On Market (DOM) was down 17% to 156 days. The Months Supply of Inventory, also known as The Absorption Rate, was up 2% to 19.3 months. The Absorption Rate tells us home many months it would take to sell all the homes available under current market conditions.
I hope that you have found this Gilmer County Real Estate Market Report to be useful. If you are planning on purchasing a home or property in the Gilmer County area, or other areas in the North Georgia Mountains, please Contact Me. I would be grateful for the opportunity to work with you, and to assist you every step of the way.
