Building boom could be coming, could boost economy
CAMPBELL, Calif. (KGO) -- We may be on the verge of a building boom and it would certainly help the economy. The Sentiment Index of homebuilders around the country has risen from 29 to 35, and although anything under 50 is weak, it's the highest number in five years and the biggest increase in almost a decade.
Because of the lag time with new construction, economists often say the housing market is the last to fall going into a recession and the last to dig back out. So Tuesday's index is a welcome sign of optimism.
If seeing construction activity makes you smile inside, you're not alone. One of the state's most respected economists says we should feel good.
"We're moving beyond the foreclosure crisis, we're moving beyond the gloom," said Stephen Levy, a senior economist and research director.
An index reflecting homebuilder confidence is at its highest level in five years. Builders say they are seeing their best sales levels since February of 2007 and that's coming off a five-decade low last year.
"So we're excited on all levels. We're seeing everybody's feeling more confident, more people are being employed, and as a result that is picking up on all levels of construction," said Michael Miller from the Building Trades Council.
In many areas new construction of apartments, condominiums and townhomes is especially booming.
Consider this graph showing new residential construction in San Jose. In 2003, there were 4,329 units. Activity dropped to a record low of just 307 units in 2009. It bounced back last year to 1,046 and residential construction so far this year, has almost doubled last year's total to 1,977, amazingly on a pace to potentially hit that 4,000 mark.
"We're hitting record levels each month in our building permit activity which is allowing us which is allowing us to hire staff back into the city which is great," said Joe Horwedel , the San Jose Building Department director.
Overall, nationwide job growth is still weak, but you could say the longer the line is at the building permit department, the shorter the line, at the unemployment office. Which is why when you see construction workers working, you should smile.
"It's the single most important piece of good news in the economy. It dwarfs falling gas prices. It's huge if it continues, it's the one positive piece of good news," said Levy.
Even thought new home sales make up a small percentage of the overall housing market, it carries a lot of weight. The National Association of Homebuilders says the average new home creates an estimated three jobs for a year and generates $90,000 in tax revenue.
housing market, economy, business, karina rusk
- San Jose police officer facing sexual assault charges
- Feinstein: CIA improperly searched computer network
- Officials investigating acid spill at Tesoro refinery
- Family mourns young woman killed by tree
- High speed chase ends in crash in Richmond
- Lanes reopen on NB I-880 after Major-injury crash 21 min ago
- Report: CVS could face $29M fine for painkillers
- Portland family calls 911 about angry cat
- Japan marks 3rd anniversary of tsunami disasters
- Crews fix broken water main in SF's Lower Haight
- Smoke and carbon monoxide detectors put to the test
- Stars raise money for SF children's hospital
- abcnews: 'The Bachelor' Finale Full Recap
- weather: Bay Area weather forecast for Tuesday