Secretary of Commerce Wilbur Ross is recommending “a 24 percent tariff on all steel imports from all countries,†the NY Times reports. Ana Swanson writes that the tariffs, “are aimed at saving American steel and aluminum producers, who have struggled to compete with a flood of cheap metals from abroad, particularly from China.â€
Ironically, Diana Olick reports for CNBC, in a piece about multi-family housing, “The cost of that two-by-four, lumber, is now at a record high. Other products like steel and concrete are more expensive, but the real cost spikes are in land and labor. Skilled construction labor is not only expensive, it is extremely difficult to find.â€
The boom in construction of upscale apartments is not a new story, but perhaps a few developers are finally smelling danger. Toby Bozzuto, president, and CEO of The Bozzuto Group, a multifamily management and development company operating in the Northeast and Mid-Atlantic told Olick, “That being said, it is a tale of two cities. In the middle income and the lower income markets, people are spending proportionally more on their rent — so much so I believe there’s an acute crisis headed our way.”
Olick reports,
Apartment completions in the 150 largest U.S. cities jumped to 395,775 units in 2017, beating 2016 production by a staggering 46 percent and more than doubling the long-term average, according to RealPage, an apartment management software and data company. Luxury, upscale buildings accounted for between 75 and 80 percent of the new supply in the current cycle.
Of course, Fannie Mae has stepped in to provide the financial support. On it’s website, the GSE crows, “Fannie Mae (FNMA/OTC) provided more than $67 billion in financing and supported over 750,000 units of multifamily housing in 2017 – the highest volume in the history of its Delegated Underwriting and Servicing (DUS®) program.†Fannie provided $65.4 billion in financing in 2016.
