The housing slump ain’t over, folks. The numbers for March have been released (PDF) , and we feel they show that apartments are still going to be king for a while.

I’m going to provide a bit of an overview as to how we’ve been running our business on the submarket level as well, but let’s focus on the big stuff for a bit.

Much has been made of the surge in housing starts and prices that marked February of this year, one of the “glimmers of hope” in the economy that Obama’s been referring to. We felt (as marked in this post) that this uptick was most likely a dead cat bounce, and the figures released today support that notion. Private housing starts were 10.8% below February’s numbers and 48.4% below March 2008’s figures. And with a depressed housing market, the few people who are looking to buy a house sure aren’t going to be building one. Now with this in mind, take a look at the chart below.

Source: National Association of Housing Builders

Given the time-costs involved of increasing the housing supply, you think there might be a shortage sometime soon?

Those familiar with our business know we repeat this till we’re blue in the face, so I’ll provide links to a couple previous posts and make this short: The population of both the U.S. and Canada are still rising considerably thanks to fertility rates and high immigration, and those people will need a place to live, recession or no recession.

That chart above is for single-family housing, and the above numbers are for all housing, but multi-family housing has largely experienced the same thing. Multi-family starts have been steadily dropping ever since June 2008, then experienced a surge in February of this year, and then a drop this March. Multi-family starts are 42.6% lower than they were in February, and 55.6% lower than in March 2008. The upcoming housing shortage will apply to both houses and apartment buildings, in other words.

Finally, we’ve been dealing mostly with US numbers, so let’s look at Canada. Canada’s single-detached housing starts, after dropping for months, basically stayed the same in March with a 1.3% increase over February, while still being down 46% from March 2008. Canadian non-single-detached housing starts seems to have received their own dead cat bounce last month, its numbers surging 28.3% over February. This is also after a steady drop and is still 44% down from the year prior. There’s strong evidence that we’ll see a fall next month.

While this is all, of course, not good news for our dismal economy, it is good news for those looking to ride out said dismal economy by investing in apartment buildings.

However, none of this knowledge does us a hoot of good if we don’t invest in the right buildings in the right areas. So here’s an overview of how we’ve been attempting to do that:

Hamilton
As people have been pouring into Hamilton for the past few years, this may be the most obvious place of all the places we’re buying buildings, in fact, it’s so obvious, some might question that investing here goes against our model of “Invest where people are about to move, not where they’ve moved to.” And that has some merit, but there’s lots of evidence that the opportunities in Hamilton aren’t yet over. The population flood hasn’t quite slowed, and as long as median rents are $150+ lower than Toronto’s, you can expect GO train commuters to take advantage. The city is also still vigorously investing in attracting growth in a couple main drag areas, another good sign. Given the current frenzy over Hamilton, we wouldn’t buy a building unless we get a really good price in a really good area, but the great thing is, we have a deal in the works to do exactly that (the specifics of which we’ll publicize when things are finalized).

Windsor
We get a lot of head-scratching when we tell people we just bought a building in Windsor. Who ever heard of investing in city with a 15.2% unemployment rate? Well, Windsor is an interesting place, and there’s a couple reasons why we currently own a building there. First, the city will re-bound. The Rust Belt-to-Green Belt phenomenon is well in effect here, with Ford announcing last September that it will invest $473 million in building a flexible engine assembly plant in Windsor, as well as $116 million in the new North America Centre for Diesel and Advanced Powertrain Research and Innovation. A full-program medical satellite school from the University of Western Ontario also just opened in Windsor last September. The city is aggressively re-inventing itself.

Fine, you might say, but what about in the meantime, and what happens if we’re wrong? Well first, this is an excellent building in wonderful shape (13 of the 22 units have been fully renovated) and is in a fantastic location (Barely a kilometer from downtown). And Windsor is lacking in apartment buildings with those qualities; the management of the building has told us that every time they renovated units they were instantly full. And since the price we bought it for is so fantastically low, even if Windsor makes no come-back, we will still have equity just by fixing the rest of the building and filling them with people.

Cleveland
Cleveland and Windsor have some similarities, both in that they are currently economically depressed (Though Cleveland not as much as Windsor), and in that they are poised to make a comeback. Cleveland’s job market, which has been in free fall for a lot of the decade, decelerated last year, and looks to gain jobs in 2009. A lot of Cleveland’s economic vitality is tied to health care, one of the few sectors of the economy that isn’t hurting from the recession. BioFormation, an organization dedicated to supporting the growth of health care bioscience facilites, is based in Cleveland, and over the last two years has snagged $405 million for health care venture investment in the metro area. Oh, and some magazine called The Economist said it was the most livable city in the U.S.

The Shaker Plaza area, where we’re currently in negotiations over a building, is a 20s’-era planned shopping plaza, and it’s undergoing major renovations thanks to the Coral Company, who is facilitating its up-and-coming status as an in-fill area. Coral already brought in Dave’s, an upscale grocery store, and is also putting in an ice skating rink, outdoor ampitheatres, a parking garage, and an outdoor sculpture museum. This is where being choosy about the area we buy in makes the difference, as all the stars are aligned for this neighborhood to take off in the next few years. And once again, we’ve found a fantastic deal on the building we’re looking at with only mild renovations needed, so even if we’re wrong, gaining equity still won’t be that difficult.

Winnipeg
Ah, Winnipeg. A city that hasn’t quite fell privy to boom-and-bust waves, and has remained immensely livable and fairly stable over the years. But even Winnipeg is starting to pick up its population, with official projections to add 30,000 people between 2007 and 2012 (it took the twenty years prior to gain the last 30,000).

There is also a marked shortage of apartment buildings, particularly in the Exchange area in the northern part of the downtown core, where we just put a gorgeous building, The Princess, under contract. Also, 40 percent of adults who live in the Exchange District have a bachelor’s degree, and 20 percent have an income of $100,000 or higher (which is even more significant considering Winnipeg’s low cost of living). Demand for quality apartments is substantial, and we are working hard to renovate this building to fill the gap.

The apartment building shortage doesn’t look like it’ll be too short-lived either. Non-single-detached housing starts for 1Q’09 were 45% lower than 1Q’08. Single-family starts were down 20%.