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MECHANICAL CONTRACTING BESCHLOSS BEAT


Rental dwellings lead housing unit construction surge


BY MORRIE BESCHLOSS CONTRIBUTING WRITER 48


seemed like a significant residential rebound. Unfortunately, this report was a misleading reading, bolstered by a recent high in apartment unit building starts. The sharp drop in September existing home sales painted the realistic panorama of declining individual residential ownership. As first indicated in these columns more than a year ago, a full swing to rentals over ownership is now underway. It’s safe to say that this is not a transitional expedient, but a permanent sea change in the habit pattern of the American shelter-seeking public. Anecdotal evidence indicates a major swing from considering a permanently-owned


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Multi-family buildings, especially in the nation’s major cities, are springing up at a record pace... Even big city units, allocated for condos and co-ops, are switching to rentals with accelerated speed.


residence a prime asset to one that is becoming an increasing liability. The fierce price collapse of even the top-of-the-line villas throughout the nation guarantees that the busted housing bubble will not come back, even in the more distant future. But in the zero-sum game of residential needs,


apartment building and rentals are destined to go ever higher. Multi-family buildings, especially in the nation’s major cities, are springing up at a record pace. In the meantime, rents have risen sharply, and waiting lists for openings are lengthening. Even big city units, allocated for condos and co-ops, are switching to rentals with accelerated speed. To put the 180-degree turn against residential home


ownership in long-term perspective, potential purchasers are frightened of the rising number of foreclosures. With income levels stagnating, even mouth-watering prices and record low mortgage rates are proving limited incentives to potential home buyers. Lending institutions’ reluctance to extend home loans also has kept the brakes on. The idea of flipping (which saw housing prices often


double in the last decade) is relegated to the past. However, the switch to the heavier construction and more prolific systems development is proving a boon to mechanical


t first glance, September U.S. home construction of 658,000 housing starts, up smartly from August’s 572,000, and the most since April 2010,


contractors and installers as well as suppliers to this growing sub-sector of commercial/industrial craftsmen.


EPA regulatory oversight slowing current U.S. energy development spurt


House Budget Director Paul Ryan (R-Wisc.) has


graphically accused government regulatory intensity as the main culprit in current business development stagnation and lingering unemployment. As repeatedly mentioned in these columns, decrees by


the Environmental Protection Agency, headed by Lisa Jackson, have become a partisan issue. The controversial stoppage of water to the agriculturally dormant Central Valley early in 2009 to save an endangered fish specimen from extinction highlighted the political volatility of the arguments. This often quirky, but increasingly vigilant, action on anti-environmental activity has resulted in intense scrutiny by the EPA of all renewed domestic energy development. After the BP Gulf of Mexico drilling disaster last


summer, the EPA stopped unrestricted offshore drilling, and the administration only now is slowly issuing drilling permits after more stringent review of the proposed activity. The EPA’s increased attention to nationwide “fracking”


of oil and gas fields (an activity that environmentalists claim releases toxic substances into ground-water supplies), and even accelerated development of previously abandoned “dry holes” because of profitable global oil prices, has created greater resistance from the Obama administration. The EPA currently is reviewing plans for the controversial Canada/U.S. oil pipeline, which would pass up to four million barrels of oil into U.S. refineries in the Louisiana and Houston areas, as well as those located around the Gulf of Mexico. With the final decision for this critically-needed oil


supply input needed by U.S. commerce and industry, not to mention the positive impact on the America’s trade deficit, the EPA is assessing the proposed pipeline route with an eye toward environmental impact and groundwater quality issues. The administration has halted construction of the pipeline and required rerouting to avoid environmentally sensitive areas in Nebraska, a move which will delay final approval until after the 2012 elections, adding grist to the partisan wrangling over the pipeline project. However, the potential employment of thousands of


construction workers, in addition to less Mideast energy dependence, provides a strong counterweight. While the U.S. stalls, China is continuing to acquire additional Canadian oil and gas properties, with the pending acquisition of Canada’s Daylight Energy Ltd. (an oil and gas producer) by China’s Sinopec Industries the latest development.


Retail sales swim against economic tide At first glance, the 1.1% September retail sales


increase and the upward revision for July and August e Turn to BESCHLOSS on p 50


phc december 2011 www.phcnews.com


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