Housing Starts Collapse Most In 8 Years To 18 Month Lows

Tyler Durden's picture

Housing Recovery? Yellen, we have a problem. Housing Starts for February collapsed 17% - this is the biggest MoM percentage drop since February 2011, and at -184K units down, this was the single biggest monthly decline in absolute terms since January 2007! At 897k SAAR, this is the first sub-900k print since September 2013 and biggest miss since Feb 2007. Multi-family starts are the lowest since June 2014. The collapse was dominated by the Northeast (-56.5%) and Midwest (-37%) so it must be the weather, right? Not so fast, The West region saw starts collapse 18.2%.

 

Ugly:

 

California ("West") housing was crushed by heavy, heavy snow:

 

Multi-family starts are the lowest since June 2014.

 

There was one silver lining: hedge funds are rushing to take out permits
on rental housing which soared from 371K to 445K. At this rate there
will be more rental housing built in the US than single family.
Assuming, of course, any of these permits actually become "starts."

 

Charts: Bloomberg, ZH

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SethDealer's picture

housing has been overpriced for 10 years, prices need to come down rather than just lowering monthly payments with low interest rates.

Oldwood's picture

Obviously you do not earn a living in construction. Imagine what housing would cost if built by union carpenters rather than illegal Hispanics.

cossack55's picture

BDI + 100K shipping containers +  =  low housing starts

Oldwood's picture

A whole new spin on "stacking".

SheepRevolution's picture

I bet you stocks will go up on this, thinking it will increase the probability of QE5, (6, 7 or 8... I don't know, I lost the count).

Kprime's picture

Precious Metal Housing

SethDealer's picture

It costs $120 sq foot to build a house, maybe $160 if you go full blown top of the line. Then this house sells for $500 sq foot becasue the land is so overpriced, not to mention the taxes!

Oldwood's picture

Not sure where you are looking at $500/ft housing but it's not where most people live. Manhattan? HK?

j0nx's picture

Northern Virginia area in modest locales is damn near that high. I toured a very modest 1100 sq foot SFH last week in Fairfax County that was listed for $425K. No way my family could live in that.

Bunga Bunga's picture

Houses in US built like in 18th century. The only difference to then are the electric and pneumatic tools. 

http://www.businessinsider.com/3d-printer-builds-house-in-24-hours-2014-1

Blankenstein's picture

If buyers can't afford them, then the prices have to drop in a free market.  No doubt the Fed and government will continue to pull out all the stops to get buyers into homes they can't afford.  Housing Bubble 2.0 will end badly.

Global Hunter's picture

In 1984 when I was 9 my parents bought a 3 bedroom detached in the suburbs of Toronto with a pool that cost CAD 93,000 and my father was working in a factory and he made CAD 60,000 per year.  The same house today is CAD 400,000+ and what factory jobs that are left would be lucky to make CAD 50,000 per year.

Yes house prices must come down, a lot just to meet the purchasing power of declining wages. Calculate in the inflation in heating, electricity, property taxes, food, clothing and petrol to get to work even more so.

Ward cleaver's picture

Yes but that manufacturing job has been replaced
by the more important job of creating apps for
30 year olds playing video,games

j0nx's picture

Obviously the DC area did not get this memo. Shit is crazy out here in Northern Virginia.

Chauncey Gardener's picture

Supply and demand from the nouveaux riche
on K Street...

Kprime's picture

All .gov workers with freshly minted 100's

Oldwood's picture

We are all already living the dream. Why should we want for anything?

Chauncey Gardener's picture

It's a big club, and we're not in it.

--George Carlin, bitches.

new game's picture

geez, didn't see that coming. ha, hockey stick (upside down) lumber futures.

papaswamp's picture

So the NE comprises 17% of the population and the midwest 21% everyone can claim snow was the cause for the drop? Even though the West has 23% and the south 37%. Guess the entire country was covered in snow for the whole month..... Amazin!!!!

new game's picture

loosing track of down side misses. oh, looky stawks at nearly all time highs. makes purefect sense...

Quirkel's picture

Its transitory....all bad news is transitory

thismarketisrigged's picture

wow, these numbers r  fucking ugly.

 

correct me i am wrong, but is this the biggest miss since lehman?

 

shit keeps getting worse and worse.

ComplexCat's picture
ComplexCat (not verified) Mar 17, 2015 8:51 AM

But Building Permits data beats so it's all good for the algos.

NoVa's picture

SF permits continued down trend - blue line.  

Mulit-Family permits are rising -  red line

 

Since Lehman TM

venturen's picture

Next are the Fema camps....so Billionaires have more room to play...they are building mult-family like wildfirre...odd thing is population around here keeps dropping

kowalli's picture

recovery? anyone?

Mike in GA's picture

Nothing a nice June Fed funds rate increase won't help.  

Sez right here, "Heavy Snow..."  http://www.marketwatch.com/story/housing-starts-sink-17-in-february-owin...  Spin, baby spin!

PTR's picture

Yes. A blizzard of deflection:

http://www.bloomberg.com/news/articles/2015-03-17/here-s-why-you-should-...

 

On a different note, there was a useful link for a good interactive rig shutdown page:

http://www.bloomberg.com/graphics/2015-oil-rigs/

Chuck Knoblauch's picture

Watch Yellen raise rates and continue QE policy simultaneously.

She's a magician.

An illusionist of bullshit.

Expect anything and everything.

NoDebt's picture

I had the exact same thought a while back.  Raise rates but do QE at the same time.  The mind boggles at the thought.

mijev's picture

"...so it must be the weather, right? Not so fast, The West region saw starts collapse 18.2%."

 

You need water to mix cement right?

Chuck Knoblauch's picture

Haven't seen the Live in California ads recently on the boob tube.

mijev's picture

Also need water to keep the workers' backs wet.

PTR's picture

You need water to mix cement right?

 

Too bad you can't re-use fracking fluids for that.  Uncle Warren would be glad to move it for you, too. ;)

Bill of Rights's picture

The  Northeast is to blame for the entire United States Housing market?

 

F A I L

Son of Loki's picture
New owner hits pause on Uptown Park's $1B redevelopment

 

A year ago, Houston-based real estate investment trust AmREIT Inc. unveiled a $1 billion plan to redevelop the Uptown Park shopping center at the corner of Post Oak Boulevard and the 610 Loop.

But the private company that just bought AmREIT is reconsidering those plans, the Houston Chronicle reports.

 

However, the drop in oil prices and its effect on Houston's real estate market is another factor.

 

http://www.bizjournals.com/houston/morning_call/2015/03/new-owner-hits-p...

jay28elle's picture

Multi-family permits looking strong this period...  yeah, we can all become one big gigantic Foxconn and live with all our worker-buddies in corporate owned units.  Come to think about it, isn't that already underway in the Bay area with Google and others ?

scubapro's picture

 

once a permit is pulled, how long does a builder get to put up a house?  1 year?      when do they pay the impact fee?

 

the 'south'....how much of that is south florida?   they think its perpetual xmas here.   radio ads about buying 'ugly' houses;  seminars on flipping;  very aggressive responses when one says 'florida has  a long history of boom bust housing, going back to Flagler and railroads'.   240k median prices for a populace whose median income is 32k/yr...

."but its the retirees dontchaknow!"    I ask, how are they paying (cash is over 60% of sales!)...oh they are selling their house up north, is the standard reply (probably straight from NAR).       im no Realtor, so im not the 'expert', but given the $400Billion of  securities based lending that has sprouted up...maybe that has something to do with it.  whocouldaknode!

that which has happened once, surely can never occur again (to begin a quote)....    given stock crash and housing crash last time:  Picture if you will, a 30% stock mkt correction,  securities based lending 'calls', more stock selling;  cash for real estate dries up, real estate prices dive,  suddenly the boomers stuck with too much illiquid underwater real estate  AND  1/2 their paper wealth evaporated...'and its gone'.      gen X got it the first time, boomers dodged it, now they will get it, millenials are permenantly crippled, will go on 15+ years post college working part time and in menial jobs.     but 2030 forward should set up another good secular mkt...getting from here to there is the question.

 

fremannx's picture
How the banking industry is stealing America’s wealth with the ultimate ‘buy high, sell low’ scam

http://www.globaldeflationnews.com/inflation-vs-deflation-part-3how-the-...

apberusdisvet's picture

You can build today in the Sun Belt for around $50-$60/sf using immigrant labor that works for subs that don't pay comp and issue 1099s instead of W4s.  Assume a $30k lot cost.  As a builder you need 30% gross profit to survive; thus a typical suburban 3/2 of 2200sf must sell for around $180k, which is 4X median household income in the Sun Belt.  See the disconnect?

coulous's picture

Are House made with gold ??

 

Monty Burns's picture

Just back from Florida. Staggering the number of seemingly abandoned houses - I'm talking mansions here - all along the intracoastal by Ft. Lauderdale. Told they're being looked after by bank-appointed caretaers.

scubapro's picture

?????    your observation makes no sense.    perhaps they are simply empty, owned by absentee owners, which is very common here.  

miami condos, ft lauderdale mansions  highest prices ever full price recovery at the high end, not so much for everyone else.

 

a brief visit by a person who doesnt live here may not be the most reliable observation.    RE here is ridiculous again.

Blankenstein's picture

When prices fell from the bubblicious boom prices, a lot of homes were bought by investors: institutional, flippers and don't forget the foreigners laundering money.  Most haven't tried to unload on the nonexistent end users.  

El Hosel's picture

.... I can look after one of them in the winter.

autofixer's picture

Unemployement is 5,5%.  #EverythingIsAwesome! <sarc>