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Weak Housing Starts At 549K Versus Exp. Of 575K, Prior Revised Down From 593K To 578K
No surprises in the housing starts and permits data, which continued the disappointing recent macroeconomic trend. June starts came in at 549K on expectations of 575K, even as May data was revised down from 593K to 578K. Of course, with roughly 12 million vacant units still to clear out, 8 of which in shadow inventory, it is a little odd this number has not been at zero for about the second year running. Futures, somehow, ramp on this disappointing number.
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less future supply, buy, buy, buy!! WOOOT, buy the dips take this puppy higher! What could go wrong... except for every data point showing the economy sucks.
how come we're still surprised at the futures ramp? it's more rational than most think.
as the game has been played, there's never much downside, and only PPT upside regardless the news.
that said, everyone puts limit buys just above the current price, then waits for the ppt nudge (based on inflated BLS numbers, etc.) and the ramp just runs... no downside allowed. too many public pensions depending on 'up' to let *that* sort of silliness happen.
seriously, bracket the news, then wait for the PPT to prop it up and vwalla - casino royale
'til it doesn't...
Most places don't need any new houses. Although, there are some people who always want to design their own places, and/or buy new. I personally won't touch a house older than say, 5 years.
I wouldn't buy a house built after 1998. The early and mid-2000's houses are already falling apart.
That's a pretty broad statement. I live in a low to mid priced house built in 2003 (cost $155,000 w/land in 2003 in the mid Atlantic region) that I purchased new. Other than one small crack in one corner of the living room behind the sofa, there have been zero settling problems, zero other problems, very high quality built.
I ran a residential construction company for 20 years, from 1970 to 1990. The quality of the materials and labor determines the quality of the home. I've seen million dollar homes that were garbage and $100k houses that were superior. All depends on the builder.
CD, wouldn't you agree that houses built during "slow" years (early 90's, 2001-2) were built with better quality materials and workmanship. At a minimum, the building inspector had more time for each house, and probably wasn't taking bribes.
I've framed and roofed over a hundred houses for Habitat, and is something isn't right, we tear it down and do it right, insead of covering it with drywall or shingles as fast as possible.
I would agree that during slower years there is more attention to quality and detail. And during "boom" years many builders are more concerned with quantity and profit and less concerned with quality. So we are in general agreement. I objected to your broad statement, not with the basis for questioning the overall quality of houses built during certain time periods. If you had used the word "many" I would probably taken my anal attitude and stuffed it where it belongs. :>)
You said....."I wouldn't buy a house built after 1998. The early and mid-2000's houses are already falling apart."
It would have been more fair if you had said "Many of the early and mid-2000................."
OK. Not enough qualifiers.
What if I said "Every mid-2000s house that I've seen is falling apart"?
LOL
You did see the smiley in my post above, right?
All that Chinese dry wall is literally falling apart in those homes. Peeling off the studs.
No recourse for the home owners either. No one standing behind the cheap, crappy imported product.
Not only is a lot of the imported dry wall falling apart but it's out gassing chemicals I wouldn't use on cockroaches.
We're all familiar with many of the problems with out gassing from paneling in the trailers that were hastily thrown together during the Katrina/FEMA debacle. What everyone (except the victims) wants hushed up is the hundreds of thousands of traditional homes that were built with this toxic imported drywall. It's such a huge problem no one wants to deal with it.
Consider it Too Big Too Expose (TBTE). Are we really going to demand reparations from the Chinese who are sitting on over a $Trillion of US Gvt Bonds? Not likely.
Looks like we traded them toxic paper for toxic drywall.
Chinese dry wall is indeed toxic and crap- standard for these cheaters. But we have our own domestic version of crap- it is called OSB- Oriented Strand Board. Exterior Glued Plywood (domestic) is the only sheathing product that should be used for a home.
OSB (Old Shit Board) passes all the government and APA tests. So you are supposed to have confidence in the product-NOT !
Which is disturbing because no new homes (since, say, 2004), except expensive custom-built homes, use plywood. They all are built with wood-chips-and-glue. I would never buy a home that was built since 2004.
It does seem surreal in this market that half a million homes are being built.
Who's building them though? I posted on a previous thread that our unfinished neighborhood is being topped off with spec homes from the remaining builder. I figure the builder just wants to throw something up and lay off their labor instead of keeping them around in the hopes that someone would buy an empty lot.
"But the good news is that housing permits rebounded, perhaps indicating a bottom for starts."
"The near term outlook is less gloomy as permits rebounded 2.1 percent in June, following a 5.9 percent drop in May. Permits in June came in at an annualized rate of 0.586 million units and are down 2.3 percent on a year-ago basis."
well that lowest put volume since 07 yesterday with the low VIX feels great when your pocket is full of OOM puts...
Deflation BITCHEZ!
Couldn't agree more!
Of course futures are ramping. Remember, better than expected = the economy is improving. Worse than expected = less supply means future prices are higher. All news is positive
Kudos for your username.
+1
QE 2 will need Option-ARMs.
Purely anecdotal info...We have lived in the same home for many years...sort of a nice neighborhood...2,300 sq ft, big old oaks, quiet...becoming more quiet by the day...I walk the neighborhood several times a week and when the housing crash began I started counting 'for sale' signs...about 5 back then...26 at last count.
But, there are many empties that do not have 'for sale' signs...and many more with 'for rent' signs. From 1983 till 2004 there was never a 'for rent' sign in this neighborhood.
'the times they are a changin' BD
Thanks for the post. I was educated to avoid generalizations and anecdotes, but with the "quality" of the New Yawk media these days, boots on the ground are the only true source we have, and a longer term perspective means a lot. Happy Trails.
My but didn't futures recover real quick after the double disappointments of GS and housing.
First they flush to even worse than they were before the info releases and then they recover to better than they were before the info releases.
It must be magic.
If so, I might say Black Magic.
They are employing old technology.
The expectations were much lower than estimates so when the results were only lower rather than much lower than expectations it was positive. See?
Its OL' SWITCHEROO.
I'm waiting on delivery of those fancy new 3D glasses. Maybe they will help? :>)
Couldn't beleive my eyes when the futures gunned on this, still negative but still. Add in IBM, Texas and Goldman all getting a pre market pounding and a gun run on the futures makes no fucking sense. I'm so sick of this bull shit market. Fucking sickening.
I live in a sub division where the builder has been feverishly building new homes, filling in the remaining lots. These houses are spec houses and the prices are down 25% from last year. I would think a lot of builders are doing this to be able to complete these subdivisions and reduce staff. I'd bet by November, this number will be south of 300K.
I should have read the whole thread before posting. Our neighborhood is exactly the same.
Consider yourself lucky. I can think of 8 new neighborhoods within 2 miles of my (rental) house where construction has been scuttled for over a year and the builders have all filed for bankruptcy. Those neighborhoods will never be built out.
Same here.
Consider yourself lucky. Houses going up everywhere is devastating the natural world. We need to seal the borders to the U.S., let the population drop naturally, and start tearing these suckers down.
All this housing data indicates what our good friend has stated many times before:
Pimp-Co's El-Erian has called this the new normal.
If we have hyperinflation t'will called the new normal.
If we have a deflationary collapse t'will called the normal.
If we have global trade war t'will be called the new normal.
If we have World War III t'will be called the new normal.
If his bond fund is down 90% t'will be called the new normal.
If he get's slapped by his wife t'will be called the _______.
Just wanted to point out that table 4, New Units Under Construction, is the part that matters as far as people actually working. Which, of course, is down over 28% from last year. Last year, of course, being a terrible year for the industry.
LOL
Get with the program man. You're not supposed to actually read the report. And God forbid if you look at the charts and tables. So much easier to tune into CNBC/FOX/Bloomberg and be told what to think.
Independent critical thinking is strongly discouraged. Take the blue pill. :>)
Historical Data:
http://www.census.gov/const/underua.pdf
Made up a quick chart showing June data going back to 1970.
http://i26.tinypic.com/xm75mq.png
As you can see, this is the worst month ever since they started collecting this data. It's so bad, we're actually 32% below 1982 levels, which was the previously held record for worst year.
More historical data, this is the total authorizations number:
http://www.census.gov/const/bpua.pdf
Chart:
http://i29.tinypic.com/2gwt26w.png
This one goes back to 1959. Worst June on record. The industry is literally 28% of the size it was in 2005. Put a different way, new housing auths would need to increase 360% to get back to 2005 levels.
+1. Thanks!
Even the new modified formulas for these stats isn't working. Time for the misinformation crew to come up with some new formulas for these statistics.
Don't forget about population growth. I'd imagine there are more than a handful more US Citizens now than there were in 1982... it's only been, what, 28 years and we're making new record lows?
Good thing we can pump the U3 numbers for headlines - housing sure isn't going to do it.
542k more houses unbought, to be added to the supply.
If the government ever pulls the plug on support, this motherfucker is hitting the gutter.
I mean who would be dumb enough to go into 30 years' worth of debt and pay out the wazoo for a house? Houses used to run 5 years of 50% of your take-home, now 30 years of 30%? WTF.
The real problem now is that banks are holding supply off market instead of renting it. There are actually shortages of rentals now. Some places have more vacant REO than they do available rentals.
This is what M2Myth permits. Take the fucking marks, crooks, and start scavenging for cashflow. The senior tranches of the paper could at least be spared if a renter could meet half the coupon...maybe even some of the mezz tranches. But fantasy marks or not, there IS NO CASHFLOW from an empty unit.
http://www.cnbc.com/id/38244093/Home_Sellers_Slashing_Prices_While_Banks...
Any bets on which national home builder goes bk first?
Toll Brothers is looking pretty fugly.
http://www.cnbc.com/id/38307402
Does this sound like a completely stupid idea to anyone else?
I think technically fannie and freddie are already bk...
Purely anecdotal of course, but my neck of the woods, NE AR, is in as good of shape anywhere in the country. It's my understanding we've been adding jobs throughout the depression (decent ones too). Despite this fact our CRE is in the gutter or quickly getting there and any residential real estate over $300k is either incredibly tough or impossible to sell. NOTE: a 3/2 ~1500 sq. ft. built 2006+ in a decent neighborhood costs ~$130k-150k.
The lower end of the market, $100k-170k saw a frenzied buying spree towards the end of stimulus. It is still moving fairly well post stimulus and a vast amount of inventory is coming online all the time. They're building the hell out of houses in my neighborhood and surrounding neighborhoods in this price range. Of the 35 or so houses on my street, i'd say 4-6 have for sale signs. I consider this to be unusually high, but nonetheless not too alarming.
I'm sure that we are an anomaly though... and, soon enough, our little bubble will burst like the rest. Having a hard time finding any alternative to staying put... there is a complete shortage of comparable rental units and selling the house and getting anything comparable just doesn't make financial sense... I might end up building multiple rental units and living in one... hell if I know. I'm too risk averse to put up with this crap, just don't see much alternative.
a little odd this number has not been at zero...
Yes. Housing data is notoriously hard to parse, and the media always pander to the real estate lobby. Think about who their advertisers are. Still, a quick look shows most of the starts are multi-family, and in my neck of the woods, that now means set up for HUD clientelle (multi-generation welfare bums). Where is Darwin when we need him?
Still, yet, again, without the government tit, there is no market!
I think I need electric shock treatment. These numbers, any number from the politburo are getting harder to believe.
Next idea for Congress - start tearing down vacant and foreclosed houses and rebuild them.