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The Quadruple Dip: Housing Starts, Permits Drop, Miss Expectations; Houses Under Construction At New Record Low
Since the triple dip in housing was recently circumvented courtesy of QE2, and was "transitory" in theory today's subpar housing starts and permits data is the beginning of the quadruple dip. And subpar it was: starts came at 523K on expectations of 569K, down from revised 585K previously. Permits were also ugly, missing expectations by a comparable account, printing at 551K, with consensus of 590K(and the previous revised this time lower from 594K to 574K). In starts, annualized single-family units dropped from 415k to 394k, with declines in Northeast and South, and increases in the Midwest and West. The actual, non-annualized number of starts was 46.8k, with 36.2k in single family units. Completions increased modestly from 532k to 554k. And the most interesting number was the number of houses under construction, which hit a fresh all time low on an annual, seasonally adjusted basis, or 418k. At this point it is probably passe to bring up the Cramer clip calling the housing bottom back in 2008.
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Yeah, I saw that. BIG disconnects between all things paper and the REAL world. Smells of collapse, history has seen this before.
Well, that took about 5 minutes for the REITS to be slammed back to parity and outperform the broad market.
Of fucking course...Now, time to ramrod them up another 1%.
It ain't got to be real to be real, I suppose.
well, it makes sense that starts and permits would be skimming the bottom here for a while now. Not sure why anyone would think they'd be shooting up anytime soon with the huge existing inventory.
I put housing starts in the "tell me something we don't already know" category
Still waiting for all that robo-signing backlog to get back into the market. Not to mention, the average foreclosure takes a year and a half, meaning we're just now cycling over the end of 2009. Takes more than 900 days in New York meaning they're just now rolling out the supply from the 2008 collapse (ha, chumps).
I'm thirty-two and I have made alot of dumb choices in life, including booze, drugs and crime. Proud to say buying a house was not on my list of dumb choices.
In the area I'm looking at, the home prices/mortgage payment vs rental rates comparison is already pretty good. Just going to be a monsta buying opportunity at some point. Whan? When "everyone" knows its better to rent than own; greater flexibility, no maintenance, no property taxes, no insurance expenses, etc.
Nothing pays like patience. The BTFD crowd apparently do not realize that the sam e bubble assets do NOT relfate.
Only makes sense to buy a home if you are self employed in a stable (whatever that means in these times) or retired or independently wealthyor on the other extreme absolutely broke with no assets -which allows you to walk away. Let's face it, many of us most of us are going to be hunter-gatherers, if not for jobs, then food. Ownership will slow us down.
If you've already hunted and gathered, and can protect your abode, it won't be a bad option.
Nomads & Compounds.
Home ownership (owning free and clear) can make sense financially. My property tax and home insurance runs about $500 a month. Utilities are another $250. Repairs that a landlord would otherwise have to make maybe another $100. That's $850 a month to live in my 4 bedroom, 2400 sq ft house. To rent a similar house would cost $1800-2000 a month. So, I'm "earning" around $1000 a month by owning my house.
How would you spend that 1000 that extra you earn? Look just because you paid for your home does not mean that someone else has to do that. Now lets say you have a foreclosure in your neighborhood what happens to your house value? Can you sell it at its peak price?
Also how many dollars did you miss because you tied yourself to that economy that surrounds you? Did you move to new opportunities and grow your career? For many people, the answer is likely No unless you were a job creator and owned a business.
You make good points. I have high-school age kids, so I don't want to move until they're out of school. I could not sell my house at its peak price, the prices in my area are down to 2004 levels, but that's when I bought so I don't care that much. I agree that in this environment, single people or couples without children who don't already own a house are better off not buying.
I can't believe I actually started to look at this CNBC link of Cramer going on the record with his prediction. How does this guy keep a straight face on this POS program? Just as quickly as I clicked on this link, I clicked off. You're right Tyler, this guy is a total buffoon, and totally irrelevant. The only thing this did was reinforce in my mind what a crock all this financial crap is.
I believe the term you are looking for is 'sociopath'.
Fewer starts now = Bigger shortage in 2012.
Housing shortage is coming in 2012/2013... buy homebuilders now.
Wow...just wow. Shortage huh?!? Please explain where that comes from when the shadow inventory is so insanely high. Any basic freshman in Econ101 could tell you that prices will have to fall and shadow inventory has to begin to clear before starts can really pick up. Besides, new homes are crap compared to ones built pre-1990's.
Most of your 'shadow' inventory isn't really inventory - people live there.
There actually isn't a whole lot of actual excess inventory. When people are foreclosed or move from the supposed 'inventory', they will still need a place to live... that plus all the formations that didn't occur over the last few years spells a unit shortage as the recovery continues.
Basically, we've been underbuilding since '06 relative to population growth.
If you don't believe me, go back to the US Census website and look at population growth for the last two decades. Then look at housing starts over the last two decades. You'll find the numbers from both periods are remarkably similar.
The issue is that most of the building during the last decade was done from '01-'06... but the underbuilding since then is reaching such epic proportions that we will actually not have enough units by 2012/2013. Housing starts will go back to historical rates and so will the GDP contribution. Watch the economy rip as residential construction goes from under 3% back to 6-7%...
Firstd, don't take Meth Man's bait. He's a paid hack who struggles to count to 10.
He's talking his book as he needs to find a bag holder for the home builders in his portfolio.
Moth Man, good to see you haven't stopped making absurd predictions. Pray tell, just how do we go from a 2-3 year oversupply of housing to a shortage in one year?
You really should change your name from Math Man to Math Miss, because it fits on so many levels.
BTW, thanks for taking the Heat over the Bulls Sunday. My wallet loves you.
See comment above. You're all looking at it the wrong way.
People are living in the 2-3 years of inventory, so when they sell they don't reduce end unit demand (in terms of number of units required in the country). End unit demand is driven by population growth (and household formations). Population is still growing and the job market improving, which leads to household formations and thus the need for additional units. We basically run out of stock and have to start building again in 2012/2013.
Housing price declines exceed the great depression and now the number of housing starts keeps going down down down after the blip from the $8K stimulus
There will be no shortage of homeless that's for sure.
Word!
"There will be no shortage of sharecroppers" - fixed.
The counties need to be proactive and seize homes that are in arrears in property taxes. Have an immediate Sheriff's sale and require occupancy within 60 days by non-investors. Start Court House steps sales at 1 dollar. Bidders pre-register with approved mortgage financing required, or cash bond. Alternative: Houses falling into disrepair and eroding tax base. The upside is the immediate cash inflow to County coffers. This would help offset the missing revenues from non-filed documents ending up in MERS.
QE3 is going to involve at least $1.2 trillions...
Walking around my and surrounding neighborhoods, all I see are what look to be small yield nuclear weapon craters created artificially by big rigs with CAT written on them some several years back, only to be abandonded and left as an eye sore. They are everywhere. If not a hole in the ground, a skeletal frame of what was supposed to be a house, or a few spines of a steel frame that were left to rot. Housing starts... how about finishing the ones already started. This is all bullshit.. just take a good look around.
By the way-- A few more [For Rent] signs posted around the commercial areas by me. They started coming up at a noticeable rate a year ago then slowed but i saw a few new ones recently. Small stores. We're in a recovery.. Indeed!
Meth Man: Question from Frank Zappa:
What's the ugliest part of your body?
Some say its your nose, some say its your toes
But I think its your mind, I think its your mind
Interestingly, the chart shows housing starts bottoming out at every recession, EXCEPT the last one. Which to me shows that the recession is far from over.
Lawrence Yun, the chief economist of the NAR, just unfriended you on Facebook.
Shit! I'm gonna miss it. I gotta work that day.