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In western Canada and in the country as a whole, Alberta still shines. It is the leader among all the provinces in almost every economic category. However, all the other provinces in the west are also benefiting from the resource sector boom. In eastern Canada, Ontario’s financial sector and large population base carry their own economic momentum and Québec has come roaring back this year, better late than never in this cycle. The Atlantic region is counting on energy projects longer term.
Four accompanying tables reveal much about U.S. metro housing markets through November 2007. Houston is widening its lead over Atlanta as the top single-family housing market in the country. Houston has also moved into second place on the list of the largest multiple-family housing markets, ahead of much larger Los Angeles and Chicago. New Orleans and Las Vegas are the only large cities on the list of largest increases. Finally, Riverside and Miami are the hardest hit of the major housing markets.
The gap between distressed and growing housing markets continues to widen as housing permits fell marginally in November, 2007 to a level 48% below the January, 2006 peak. The gap is likely to widen further based on the latest regional trends in home prices. Permits are now higher in 97 of 360 metro areas than at the peak of the housing boom in late 2005/early 2006. Five of the 10 housing markets with the most intense development are in North Carolina. Myrtle Beach, South Carolina is at the top of the list.
The outlook for construction materials prices this year is more muddled than usual because the economic environment for construction will be in transition.
According to the accompanying table and charts, a typical nursing home had the largest year-over-year increase in construction costs in November 2007 (+7.0% on average for 25 major centers) among four medical and residential project categories monitored by RSMeans. As for the actual dollar-per-square-foot cost of construction, a two- to three- story hospital is most expensive, followed by a four- to eight-story hospital, then an apartment building and, in last place, a nursing home.
Over the past year, the volume of residential construction in the Dallas-Fort Worth metroplex has fallen by a breathtaking -28% versus -24% for the country as a whole. However, employment in the economic region increased by +2.2% year over year in October 2007, the fourth strongest rate of job growth among the 25 largest metro areas in the country. Population in the metro area is growing twice as fast as in the rest of the country and Dallas-Fort Worth has a strong strategic location in energy-rich Texas.
The housing market continues to be depressed in most parts of the country amid increasing signs that current activity is in the neighborhood of the bottom, although a small amount of further decline is expected in the next few months. No significant improvement from the current starts volume is expected until well into next year. Home affordability is above average and rising, but this is not enough to initiate a market recovery because the confidence to buy a new home has recently worsened rapidly.
Contrary to what most people believe, increases in energy efficiency usually mean a rise in energy consumption, not a reduction. This apparently counter-intuitive statement is supported by basic economic logic and was recently summarized in an article written by economists Jeff Rubin and Benjamin Tal of CIBC World Markets. What are most interesting are examples from history and from more current developments in fuel usage.
LEED is the “nationally accepted benchmark for the design, construction and operation of high-performance green buildings.
New York still heads the list of most expensive cities in which to build, according to the latest RSMeans ranking of 51 major U.S. cities. Rounding out the top five are Honolulu and three urban centers in the Bay area of California — San Francisco, San José and Oakland. As for year-over-year percent changes, Las Vegas has moved up the list from seventh position in July to number one in October. According to quarter-to-quarter increases, Atlantic coast cities are dominant among the top 10.
