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Housing Permits, Starts Surge Driven By Renewed Rental Housing Scramble

Tyler Durden's picture




 

After June's very disappointing housing starts and permits numbers, which plunged to 893K and 963K respectively well below consensus expectations, it was time for the Department of HUD to show how it's done, and moments ago the July housing starts and permits data literally blew away Wall Street expectations, as Starts soared from an upward revised 945K to 1093K, the highest print since November 2013, while permits surged from an also upward revised 973K to 1052K, smashing expectations of 1000K and the biggest beat since October.

Starts:

And Permits:

 

So is this the housing recovery everyone's been waiting for? Sadly, no, because one glance at the internals reveals that virtually all of the surge higher was on the back of multi-family housing units. Specifically, in permits, virtually all of the rise was due to multi-family, aka rental, unit construction, which soared by 73K, from 309K to 382K, a 24% increase, while single family, residential, units were up by a tiny 6K, or less than 1%.

 

Start was more of the same, because while single-family units here did post a modest improvement, rising to 656K, if well below the 710K highs reached in November 2013, all of the action was again in multi-family units, which exploded higher by a whopping 33% in one month, from 318K to 423K. This just happens to be the highest print since Lehman and matches the other highest mult-fam housing record in the past decade from January 2006, when the same number of multi-family housing units was started.

Finally, considering just how volatile this series has become, don't be surprised if in September the July data is revised wildly lower consiering the wild margin of error, especially on the Starts side, where the "final" data point is within 11% of the presented number.

 

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Tue, 08/19/2014 - 09:02 | 5113783 junction
junction's picture

Soon, a nation of renters instead of homeowners.

Tue, 08/19/2014 - 09:06 | 5113797 GrinandBearit
GrinandBearit's picture

And that's exactly what they want.

You can never really own your home anyway.

Tue, 08/19/2014 - 09:11 | 5113824 StackShinyStuff
StackShinyStuff's picture

Yep - stop paying your taxes and you will find out who owns it

Tue, 08/19/2014 - 10:09 | 5114114 BKbroiler
BKbroiler's picture

A middle class and home ownership by the general population are a short, transitory phenomena in a country's development.  Wealth naturally consolidates at the top because of inherent human nature and it's tendency towards corruption.  Was fun while it lasted though.

Tue, 08/19/2014 - 09:28 | 5113896 Stuck on Zero
Stuck on Zero's picture

It's probably all Section 8 housing for millions of new immigrants on welfare.

 

Tue, 08/19/2014 - 11:26 | 5114534 QQQBall
QQQBall's picture

No it tends to be in higher end markets to start.

Tue, 08/19/2014 - 09:54 | 5114046 TideFighter
TideFighter's picture

More and more 'Merikans understand that home ownership is  a trap, which the full payment of same is then viewed as a target by Medicaid or Estate Taxes. Private assets "lost" at the bottom of the lake are the way to go. 

Tue, 08/19/2014 - 13:36 | 5115284 island
island's picture

Yep.  

Chinese, Hedge Fund, and Private Equity as owners.  

Jack & Jill Americanas as renters.

All is well is the land of the free and brave.

Tue, 08/19/2014 - 09:04 | 5113791 Bill of Rights
Bill of Rights's picture

The only significant y-o-y increase occurred in the 5+ units category.

Tue, 08/19/2014 - 09:07 | 5113806 Number 156
Number 156's picture

Up next on CNBC, Dennis Gartman with his latest take on the market...

Tue, 08/19/2014 - 09:10 | 5113814 Squid Viscous
Squid Viscous's picture

What's the homebuilder with the worst looking balance sheet? I'm going all in!

Tue, 08/19/2014 - 09:10 | 5113815 Dungholio
Dungholio's picture

Bullish!

Tue, 08/19/2014 - 09:11 | 5113826 AdvancingTime
AdvancingTime's picture

I have been busy trying to make sense of the current economy, this is not an easy job. I have owned an apartment complex for many years and we are currently experiencing the largest number of vacancies we have ever had. Many houses in the area are empty or under leased.

In 2005 and 2006 prior to the housing collapse many people were looking at second homes, for investments or as a vacation getaway, today not only have they shed the extra home many have doubled up with family or friends reducing the need for housing. We are pushing on a string and calling it demand when someone who can barely pay the rent is encouraged by the government to buy a house they can neither afford or maintain. We have a shortage of "qualified" buyers and renters. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/12/super-low-interest-rates-disservi...

Tue, 08/19/2014 - 09:22 | 5113871 GubbermintWorker
GubbermintWorker's picture

We have a shortage of "qualified" buyers and renters.

That's been the model for quite some time, hasn't it? You just need to bend the rules and presto, they're qualified!

Tue, 08/19/2014 - 09:30 | 5113912 CoolBeans
CoolBeans's picture

Agenda 21 multi-unit housing...just as they want.

Tue, 08/19/2014 - 09:39 | 5113958 Temerity Trader
Temerity Trader's picture

We have a shortage of "qualified" buyers and renters.

That's been the model for quite some time, hasn't it? You just need to bend the rules and presto, they're qualified!

It works doesn’t it? No or low qual car 9-year loans have sent sales soaring. Consumers have been encouraged to borrow cheap Fed $4 and buy stuff. That IS the economy now. Consumer debt combined with massive government debt is all that there is to power the economy until it reaches this mythical “escape velocity”. It never will, but unless you want to see hundreds of Ferugsons, they have to keep trying. The Fed is committed to “whatever it takes”, a trillion $ a month, if need be. There will be loan forgiveness; not their fault they got in over their heads.  Rinse, repeat.  More government welfare and programs to keep the peace. Get used to the ‘New Normal’, it ain’t going away.Short at your own peril.

Tue, 08/19/2014 - 09:41 | 5113970 NotApplicable
NotApplicable's picture

How many empty houses/condos/apartments do we need again? Until this shit breaks, there can be no housing recovery, as any increase in production is merely yet another malinvestment jobs program, driven by banksters and unions.

Tue, 08/19/2014 - 09:42 | 5113974 firstdivision
firstdivision's picture

I'm far more interested in housing completions than people that file for a cheap permit.

Tue, 08/19/2014 - 10:19 | 5114176 Colonel Walter ...
Colonel Walter E Kurtz's picture

In "my region" they are building these units like crazy again. I am told that the apartment builders/owners are being approached by REIT's and national firms looking to buy the apartment complexes at outrageously high prices. I have to think these investment firms, looking for return on investment, see the monthly rents as an income stream. The problem is, that by buying these units, they just allow the old owners/builders to build more units which eventually in my opinion will lead to oversupply. They are going to have to start stealing each others renters with lower rents. I have a very bad feeling. 

Tue, 08/19/2014 - 13:08 | 5115101 ReactionToClose...
ReactionToClosedMinds's picture

I hear/understand/see that West Coast doing well.

But East Coast definitely driven by financial services which is purely QE driven.  Figure energy positively impacting those states where it is relevant.  See/understand marginal high end mfg returning to No AMerica (largely Mexico).

From what have seen in W Europe biz travels..... many feel growth, if any, is illusory with sovereign debt overhang the reality.

QE.....that is the be all & end all largely for USA and probably western developed countries with inter-central bank shennigans a window dressing factor. 

What unforseen disaster will derail this carefully modelled centrally/elitist/political class-in power forever excelsior economic recovery?

Bonus:  Never forget that Google located a major office in Chicago for a reason.........

 

 

 

Tue, 08/19/2014 - 17:28 | 5116626 Anunnaki
Anunnaki's picture

Exactly right. My mortgage payment is $400 (HARP refi. Thanks for something Obomer) a month (plus interest deduction, home business deduction etc). My friend who rents a 2 bedroom comparably my house size $900 a month. All those foreclosured people gotta rent something if they still have a job to go to.

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