This page has been archived and commenting is disabled.
Housing Recovery?
With Lumber prices plunging to 5 month lows, we have just one question for those buying homebuilder stocks as they push new highs - what are they building houses in this new normal?
Stocks disconnected once again...
but fundamentally this signals the homebuilders will be pulling back...
Charts: Bloomberg
»
- 18065 reads
- Printer-friendly version
- Send to friend
- advertisements -
Maybe we're just building less stuff in Iraq.
I guess we'll be starting in Syria any day now.
in ten seconds i can explain what every zerohedger is thinking after watching cnbs...
http://www.youtube.com/watch?v=HY-03vYYAjA
"what are they building houses in this new normal?" - Smoke and Mirrors?
I have one word for you, son: plastics.
[Name that movie! Difficulty: 3 on a scale of 1-10]
The Graduate. Great line great movie. I love how he swings that cross! Favorite scene ... besides whatsernames' legs...
concrete block walls and steel framing
Recent Graduates won't be buying a home anytime soon. The Avg student loan debt is $27,000.
The aggregate amount of the loan is deceiving... They're typically composed of numerous loans (semesters or years). In other words, you can pinpoint a single loan (typically a "group") and begin paying it down (typically the one with the highest interest rate). That $27k is probably about 6 loans of $4-5k a piece.
Of course, more practically speaking, the loan originator for your mortgage doesn't give a shit about your ability to repay given it's just going to end up in a GSE black hole. Further, by encumbering your recently graduated self with a home mortgage, you can then turn around and use it to claim hardship or inability to pay your student loan... and, eventually, be discharged of it through recent changes.
People will hold debt loads, but they won't end up having to pay anything... effectively, they've stretched the bubble bursting for quite some time.... although, if actual cash flows from the student loans are necessary to keep the lenders afloat, then they've got immediate problems.
you do not understand the system.
The system does not penalize you for defaulting on student loans if you dutifully load yourself down with the subsequent "adult" ones like car notes and mortgages. The smart US citizen pays the student loans, as modestly as possible, until they get the house and car notes, then ignores the student loans. Only people with more money than sense pays back a student era loan.
The Graduate
I just remember my dad saying: "No, son, you can't sing Mrs Robinson in church even though they say '...heaven holds a place for those who pray'... "
:-)
Now go calculate how rich you'd be if when that movie came out you took that advice and bought shares in DuPont that year.
Challange accepted...1 share of DD in 1968 was $140. But the adj price was $1.44. Today $53.80. So $5230 per $140 share.
I was being somewhat rhetorical, but I love that you took the time.
+1 internets for you, good sir. Spend them wisely.
""what are they building houses in this new normal?" - Smoke and Mirrors?"
No. Hope and Change. Forward, Soviet!!
Need MOAR "free" housing!
"...where the owner agrees to rent under the program."
I was crapping my pants until I got to that part.
And thank you for not posting up any more pictures of your awesome home-grown food just before lunch. You've been very kind not to do that to me lately!
Really common and getting only moreso for real estate on the shitbird end of the spectrum... many, many landlords on the low end are just going to HUD to collect the guaranteed payments (which are often times very generous and fail to take into account particular market prices very well). When wallstreet is the landlord, this is how they'll get their due... just collect the guaranteed payments on the rent. Whatever else they can shake out of our pockets will just be icing on the cake. They'll have good nominal returns anyway...
explains why LL stock is doing so well eh ?
Sorry to bust the gloom and doom fest, but the 2nd chart does indded indicate a housing recovery. Both permits and lumber prices are up sharply since 2010. The volatility in lumber prices does not seem outsized given other periods of volatility. The swing could be seasonal or reflect competition for imports, or temorary over supply of production ramp up to meet rising demand.
Gotta call'em like I see 'em, and this chart does not indicate a lack of a housing recovery. Many other charts I have seen are better indicators of a lack of a real recovery, but these do not.
Clearly this was all a misunderstanding. The home builders association tweeted the lumber industry with the excited news "we are building a house!" but the lumber industry thought the tweet read houses, plural, not house, singular. So they overproduced.
People just need to be a bit more careful in today's delicate economy.
Deflation, due to a collapse in aggregate demand of real goods and services, partly due to higher taxes due to a socialist state.... is a'coming
the government can create credit & spend money, but it can't create real collateral.
very well said my friend
Is that the socialist state where the top 1% of households get 99% of the income gains?
Paper.
Mainly dollars recently printed by the Fed...
Housebuilders don't have to build any houses for the stock prices to go up, just needs HFT hot potato churn
houses are a horrible investment. when will people learn...
Houses are the Ty Beanie Babies of the financial world.
They were great for about 50 years.
By great you mean kept their vaule when adjusted for income/inflation until people started using them as ATM's and in place of actual coins in coin tosses (get it - flipping!).
Especially built from (ply)wood(like in America) vs brick (like in Europe), like rly why would any1 want their home to be made from the least durable material possible? just imagine this, if u soften wood a bit you get paper!
people who buy new homes are driven by how shiny they are, not how durable. If you want durable, buy a home from early in the previous century. I have to laugh when I see what homes are built from the past few decades.
The industry, frankly, cannot be trusted. They actually try to tell you that pvc plumbing is more durable than copper, for example. Cheap shit, made cheaply, built to last for 20 years then collapse like a cardboard box.
Multi-tenant rental units are built with concrete
Thas because they have to be bullet proof.
If lumber prices are falling, that means moar profit for homebuilders. Potemkin style.
I guess it's another form of material-inflation they use less wood to fill the same space
We don't need lumber anymore. Houses are made from DOLLARS!
Houses are made from love, not wood.
Here is the housing recovery:
http://research.stlouisfed.org/fredgraph.png?g=7iv
Just barely reaching the TROUGH of late 1960s sales numbers, with 50 million more people alive and mortgage rates a fraction of what they were then.
love that chart
It's IMPORTANT to have these facts.
The NAR will post charts back to 2008 and celebrate.
All of these "it's getting better" mantras data mine their information. You have to fight hard to get the comprehensive look.
So I will post this chart again and again.
thank you for the chart. It cuts right through the bullshit. Beautiful.
Yep keep posting that chart. FYI to everyone looking at it. Notice in the past when we hit 400K home sales/yr that this was during recession (dark gray). Notice how in what 2009 when the 'recession ended' that housing sales continued to drop contrary to every OTHER recession in history.
This one chart alone tells us that either this time its massively different OR the economic numbers are being cooked and that gray bar should have continued right up to 2012 if not beyond.
Yeah 'housing recovery'. Housing sales have recovered from ALL time lows to just historical lows? God damn I love the smell of shit covered lies when the sun is out. Sun dried tomato chips for sale right here my friends, sun dried tomato shits for sale right here.. Get em while they are hot!!
Steel-reinforced concrete, I hope.
(Bunkers, bitchez)
CNBS just had Mike Jackson of Autonation
on. Just said: "this Housing Recovery is real"
".. construction of new homes is going to resume at very accelerated pace.."
Blah blah
hey, he's right, it'll be an accelerated pace...he just left out what direction the acceleration will be.
Get a car guy to 'expert opine' on housing...?? I am going to see what Toll Bros. think of the new Camaro..!!
They will suggest the stucco option. They always do.
The lumber price reflects a slowing China...now they bring all the crooked money from over there and buy existing homes in the West...supporting home prices over here...and fewer builders building fewer new homes with cheaper lumber...did I cover everything...lol
The falling lumber prices have to do with the massive supply that Sino-Forest just dumped into the system.
Not using Lumber to frame it @ 5mo lows
Not using Copper to plumb it @ 3yr lows
Not using petroleum to build it @ 15yr lows in falling demand
Interesting houses...but here in PDX they are building a shit ton of apartments and condos.
A huge condo project near me that was delayed for nearly 4 years has been up and going recently, looks like they're about 3/5ths of the way done now.
They built it on a glade that was a popular place for migrating geese.
Also, to reiterate, i recently worked on a massive new apartment complex, the materials they were using were beyond cheap, no metal piping anywhere, not even the main lines. When the thing was finished you could literally punch your way into the next unit over..
So maybe check in particle board, pvc, and bondo..
When it gets to the point you can drive around blighted old cities like Detroit and go, "damn, these houses are built like tanks, ain't they?" you know something has gone fundamentally wrong with the housing "industry."
New houses are one of the biggest cons there is. You get the sucker to pay a massive premium for a sub-par structure whose chief selling point is that they don't have to clean first before they move in. yeah, that "clean up" part is a bitch, I can see the logic lol.
You too can own a home built out of bullshit.
Noticed several foreclosed empty for months. Bankersters are keeping them off the market to keep prices high and slowly releasing them.
The Obama admin and the Fed encourage blowing another housing bubble. by selling homes and turning them into rentals.
Still a lot of shadow homes out there. One massive attempt by Bubble Bernanke and the Fed to re-inflate housing. Overseas investors also buying houses to flip into rentals. A rental glut in the future?
They're using Ford F150's in place of lumber.
http://3.bp.blogspot.com/-N2TL0mxsmYg/TxaklbK1jqI/AAAAAAAABr8/vxPGxyIEX3c/s1600/carhenge.jpg
Labor costs are plunging due to 1) high uneployment and 2) masses of cheap labor coming in from across the border who work for <$6/hour.
The builder down the street says it now costs him less then $40/psf to build a 'nice' house. So why are folks still paying more?
Holy fuck that's cheap... that can't be factoring in the lot/land cost.
I live in one of the lowest places in the U.S. for cost of living and we're more towards $80-85/ft. for a "nice" house (including land cost for a .20+ acre lot). And that's the discount for building multiple houses at the same time. Sales prices on new construction are in the $100-$110/ft. range.
CheapBastard,
So 20,000 sqft is $80k plus $10k for the lot = $90K. Where are you, Alaska?
So, the house prices will bounce back to $105K.
Cue FM/FM loan forgiveness program. Demarco who?
And sugar is making multi-year lows almost weekly...so what does that mean? Nothing seems to mean anything...the only factor today is FREE tax dollars given to the already rich to get richer! And btw, go buy some YELP....lol
It means less high fructose corn syrup, which is a good thing...
Well, as we all know from the PM markets, massive real demand for a good pushes its price DOWN. Obviously.
Sheesh, that was easy, next question!
/sarc
Pure and simple socialist channel stuffing. Corporations buy the land,corporations produce the materials, corporations build the homes, corporations provide the financing for production and sale to chumps. In the end, the banksters own the property and rent it out to the debt-slaves, and the taxpayers bail out any losses, and the sheeple said, "USA, USA, USA". It's just like in Chinamerica.
CheapB, I just finished rehabing an older home for about $25/foot excluding an estimate for "profit" from the sub-contractors' price tags. The project didn't need work on roof, siding, insullation, chimney, any studs, and only needed a few pieces of drywall. The refurb was in a small town with contractors charging rates at least 10% below the "city rates" where I live. I think your builder's claim $40/foot is low by a sizable amount.
Rusty, you've got an extra $0 in your math.
Fundamentals smundamentals...
Philly Housing Index is closing in on a 62% retracement of the 2005 high.
http://bullandbearmash.com/chart/monthly-philly-housing-index-falls-hard...
Buy anything at a top - a bag holder is a bag holder.
Ahhh....I think ZH is nitpicking what looks to be a pullback to support. When it breaks support....rerun the article with updated graphs.
Don't worry, they have built just to many trees.