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Friday, March 29, 2024

Multi-family housing shows fragility during its recovery phase

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The U.S. Census Bureau and HUD announced last week that housing starts
took a dip in the month of June, an unexpected turn of events as the housing

market saw a boost in production in previous months. The report comes at a

time when instability in the economy is rampant, and disappointing numbers

are cutting down hopes of a sustained economic turnaround in the U.S. Growth

appears to be stalled as recent economic reports have failed to meet

expectations, discouraging economists from maintaining an optimistic

outlook.

"The disappointing numbers from June aren't necessarily indicative of what's

to come for the multi-family housing market," says Al Goldstein, President

of Pangea Properties. "Just as in the stock market, one month's numbers

don't always reflect the big picture, and if anything it shows that the

fluctuation from month to month is a sign of volatility in the market. Based

on that instability we can't call this a full recovery, just yet, because of

the fragility of the market."

Goldstein continues to explain how the false signs of recovery, along with

low yields in the capital markets, encourage uneducated investors to pour

money into the housing market, creating higher price points that aren't

necessarily in line with property value. Goldstein believes that these

actions create a slippery slope in the housing market and that it could be

detrimental to its stabilization.

"The dip in multi-family construction shows caution in the market and is an

obvious sign that people are uncertain about where this wave of building is

coming from," continues Goldstein. "We're confident in the strength of the

market but cognizant of the signs of instability. At Pangea we are dedicated

to investing in properties by adding long-term value to the buildings we

purchase as well as stabilizing the neighborhoods we move into. We think

those are key ingredients to the success of the housing market, along with a

more gradual progression of building and construction that eliminates the

sharp ups and downs we're seeing now."

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