We’re not kidding ourselves: the U.S. economy (and that of the rest of the world) is in a mess, even though the Q4 GDP fell “only” 3.8 per cent. Consumers aren’t spending, unemployment is rising, which will lead to less consumer spending and more unemployment. But is housing starting to look attractive?

First, let’s look at the supply side of the equation. There’s no question that too many homes were built in the 2002-2006 period, as anyone could obtain financing for one; however, housing starts haven’t been lower in 40 years. But as the chart shows, multifamily starts have been weak as well. Although multifamily starts have not dropped (yet?) as drastically, they are still not back to the levels of 25 years ago.

On the demand side, we see a U.S. population that has been growing steadily for decades, and has added about 2.5 million people a year over the last decade.

The Centre for Immigration in the United States estimates that over 1 million people enter the U.S. every year. Most immigrants look to rental units as their first accommodation. Add to the apartment demand those who have lost homes to foreclosure, and there could be some positive news in the multifamily space in the near to mid term. But as house prices have been coming down, making the housing market generally more affordable (again, acknowledging the weak economy), these population numbers will have a significant impact on housing inventory. People have to live somewhere: providers of housing (rental unit owners, home builders, etc.) may not be dead yet.