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Peak Construction Spending?
Construction spending grew at 13.7% YoY in July. It has only grown at a faster pace than that once - at the very peak of the idiocy in Q1 2006.
Nope - no bubble here...
So that got us wondering... how is it that Construction Spending is surging as Lumber Prices are collapsing? (unless homes are now made of Twitter share certficates).
The answer is simple - lag... and we have seen this picture before... and it did not end well.
Clearly, the exuberant construction industry jumps on Fed-induced signals of recovery and mal-invests en masse... until reality bites again.
Charts: Bloomberg
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If you build it, they will come!
Humans making the same mistakes over and over and over again, it's getting pretty old. Humans are stupid. The fleecing will be epic. I won't be a part of it. The only way to win is to not play.
Construction should have shut down and stayed shut down after 2008.
Giant malinvestment driven by make believe interest rates. An overhang to last 50 years.
SHUT.IT.DOWN
oh it will be shutdown all right
Serial bubbles are all they have left. There is no real growth. Just capitalizing on volatility, if you're in a position to do so. They're just doing it over and over and over again. They're hardly even changing the tune. Like a time warp or Groundhog Day.
To wit:
1. Real estate bubble happening EXACTLY like in the middle of last decade except now it's commercial and multi-family.
2. Dot-com bubble happening EXACTLY like 2000. And in this case I do mean EXACTLY. It's still "eyeballs" and "hits" and "cash burn rate" and the lies about all the advertising dollars rolling in that never do.
3. We build cars that look almost exactly like their 1960s counterparts. Camaro, Mustang, Challenger. (This probably pisses me off more than the first two points, to be honest.)
We're not just out of money and out of growth, THE WHOLE FUCKING COUNTRY IS OUT OF IDEAS.
"THE WHOLE FUCKING COUNTRY IS OUT OF IDEAS" Ive been saying this for 15 years. There was never the proper turning over of the reigns from the Boomers to the X'rs at the corporate or governing levels, theres been extended childhood for the millennials, delayed families, delayed careers, in short a retardation of the natural cycle of civil society turning over and continuing into the future. That process brings new and fresh ideas and direction and didnt happen. Instead we have a society focused on every god damned distraction possible from chicks with dicks to ghetto riots and home flipping, anything to keep the great silent majority pacified and the parasites satiated. Its a cultural bubble as well as a monetary bubble. A return to basic living and production is long over due.
If Trump sends them all back that will be quite a few vacancies and job opps. Right...
Humanity was hijacked.
The hijackers' money changing tables were once over turned in the temple.
Now we, the people, need to overturn their money changing tables, and free ourselves from the hijackers.
Zion is a scheme, not an ethnicity..
If you get construction loan wood butchers will build.
First they buy new truck w/const loan then build.
smoke screen
Yep, construction spending is a very general thing and they don't break it down, so we don't how much is materials and how much is bribes etc.....
The Fed's Ptomkin village.
In Canada there's so much construction going on, despite very high vacancy rates and a recession. Malls are 10-20% empty everywhere, I see entire buildings empty, whole floors of towers are for rent, it goes on and on.
Yet they're building like we actually need more.
The world has gone right fucking nuts.
It's the Chinese model.
with Chinese buyers who have bought legal residency rights.
Homes are now built on crushed dreams or bricks made from FRN's for the lucky few.
WTF is there to build? Seriously, we have an overabundance of houses, retail space, car lots, and office space. The only real booming area around here is medical related.
We need more new million dollar tar paper shacks for our Chinese 'guests'......
Agreed. We have abandoned houses and old junk being sold at ridiculous prices. Someone will end up holding the bag.
Rather than repair and renovate our school buildings, the school district convinced the taxpayers that demolishing most of our school buildings (all structgurally sound) and constructing new ones will solve the sorry state of public education in this district. The way the architectural firms gear up and plug the districts into the sales engine is a sight to behold.
Now tell me, is a new building going to be the answer to academic underachievement in a district where a new art teacher is told that he has no materials and supplies allotment because it has been determined that his course will be a blowoff class? It happened. The teacher quit.
It's three R's, not four.
Its 1 R, 1 W, and 1 A
I've noticed a building frenzy around these parts. I thought they'd all be bought but there are for sale signs popping up for these new homes. KA-BOOM!
why would ppl want their old obama phone when they can get the newer,shiny ones with cheaper terms?
FUTURE LIABILITIES.
At least that is what they are building up here.
With mark to fantasy they can double the price and call it an asset-even if it sits empty.
You just defined a Chinese building boom.
The taxing authorities must be loving it.
I hope that doesn't mean we have two more years of this dog and pony show...
I'll bet for sure it means six more weeks of Winter.
Plenty of trades people who haven't worked in their respective vocations since 07/08/09, and likely will never again.
Lotsa Mexicans still hanging around home depots? That will change too.
Lag is a bummer. It also takes time to read the tea leaves on an economy and the market forces. Dwellings have a minimum 90 day and often 9 month planning and execution phase.
If I was in construction I would ban ZH, lol!
NorCal here, they literally cannot build houses fast enough here, a la 2006. I can't figure out who's buying... Probably mostly a result of stupid expensive rents in the same area, forcing people into homes (and prices sky high)
Same story in Seattle/Portland. We saw this same stupidity 8 years ago...
What the FUCK is a lag?!?!
a premature ejaculation...
What is Lag?....well, when you are making a really long putt.......
Imagine Wiley Coyote has just run off the cliff... now he's up there, holding his sign, just before gravity takes its ugly toll.
That period of time, after his feet leave terra firma, and before he starts his rapid descent to making a puff on the canyon floor, is what you call, "lag."
We've finally made it to the KA! Now get some popcorn because the BOOM! is just about to happen.
Tyler
u r the 'GREA`T'EST'
bravo zh
The fed makes more homes so that the fed can own more.
last i checked,... they ain't making any moar land
Maybe fewer people, though, eh? I think that would have the same effect, woudln't it?
Great market on the horizon for subsidized housing. Four wives means four houses.
Who is providing the money for these arrangements and how do you have four wives in the USA?
https://www.youtube.com/watch?v=l5_8HyKlvEg
BUY NOW OR BE PRICED OUT FOREVER! NOW IS YOUR LAST CHANCE TO GET IN! JUST ASK LARRY YUN! RATES ARE AT ALL TIME LOWS! HOUSES ARE MORE AFFORDABLE THAN EVER!
PT Barnum was right. There's a sucker born every minute.
Multi-family new construction is a huge bubble, especially in Texas, and especially considering they're often renting out the product for about $2 per sqft. They're going up left and right to account for all of the illegal immigrants in addition to transplants from California and the like, but with oil slumping my buddy already got laid off from his job, and more are coming. For sale signs everywhere.
Believe me, this is a bubble that doesn't get enough attention. I'm a superintendent and I know first hand that new construction is out of control. When the credit stops, you'll have half-built construction sites everywhere, with tons of folks out of work.
The impact will be huge.
You are absolutely correct
There are about 70 unfinished projects including high rise ocean front condos just south of San Diego in Baja, rusting away. This was from the 2007-8 era.
When they were being build, I noticed something unusual. When I built my home there in 95, I was down regularly to check on progress. There were no owners coming around, telling me it was all spec.
One of the tower projects that remain unfinished had the name Trump on it. Apparently there were buyers for the upscale development and they got burned.
Our group at the time sold that development to trumps group. they are fraud fuckers. Was set to go, deposits 20%+ and all...they came in and spent the reserves cause it was going to rain money on them....till it didnt.
RIPS
Recent cali transplants are going to suffer badly...anyone who bought a home here in TX over the past 3 years is screwed and with the job implosion here, coupled with the influx of cali losers - it should be spectacular.
are these kinda like the empty cities/towns being/ having been build'ead in china?
shovel ready-- but[t] fuck', built` it, and they will cum',
bubbles being blown before the compressor's ever turned-on...
[...] compression at its best?est
Minneapolis:
Multi-Family builds to the max for going on two years. I've finished drywall in the same 2 sq. mi vicinity for the majority. One exception for an office tenant space and NPR gets new digs in downtown St. Paul.
Cranes up all over, too, most for moar apts. Nothing like it since the '90's when everyone bid senior housing.
It could be a lag, or it could be commodity deflation from a collapsing Candian economy. This is one of the benefits of importing price deflation. Let's enjoy it while it lasts.
Just spent 8 days up in Canada and now circling back through the pacific northwest. Almost my last day and it's hotel time for us now. Camping done. Canada's dollar flucuated at least a whole 5 cents just during the time I was there. Even got down to 0.74 per 1 FRN.
Who needs lumber when you can build with hot air?
actually, all you need is
air + some water
https://homes.yahoo.com/news/just-add-water-concrete-buildings-built-air...
This economy never wanted to die and still does not
The things that made it the best in the worlds history are the people.
It reminds me of Jim Carey trying to kill the cow that refuses to die.
It would heal fast if they just stop trying to kill it!
https://www.youtube.com/watch?v=MX7Yo0tWDgk
We used to have some amazing people back when the USA was really just West Germabritirascotistan with a splattering of Poles and Italians thrown in.
Now we're becoming Nigerexico with a smidge of dirka-dirkastan.
(All controlled by international Jewry of course)
This electrician has definitely seen "rough-ins" drop off noticibly. Not enough yet to put anyone out of work, but enough that we may not be in a position to work unlimited overtime without asking. Wrapping up a lot of "trim-outs" for projects that have been going on for awhile. One of the GC's who subs us has cut his workforce from 9 down to 4 carpenters and another has so many seemingly idle half the day I have no idea how they afford to keep so many around still.
So we'll see how things go when I get back from this vacation. I'm going to need the long weekend to recover from this vacation. Two weeks gone I'll bet there'll be some news floating around to catch up on.
Building of single family homes with the exception of small starter homes has ceased here. Most builders are now remodeling or building pre-solds only. 250k and above in Arkansas sit for a year or two before they sell, some have sat for over three years.
Multifamily is slowing down, and commercial is still going strong here. Being in a three college town helps apartments stay full. If it was not for the colleges many apartments would be in trouble, unless your a tax credit site.
Many of my builder friends have simply retired. Several more went bankrupt building large spec mcmansions.
You guys are getting small starter homes? That would be a blessing for us young people. Can't find one in my area for under a quarter mil unless it's 80 years old.
No sir. We're building plenty of 6,000-15,000 square footers though. If you've got banker/lawyer money or you're a retired general (Or Senator from Tennessee) we've got the coastline (Central Maryland) for ya with plenty of rivers and inlets coming off that bay. Cost of the lot is the least of your worries and the county gladly accepts the extra property taxes (instant approval!)
I often travel through the poorest of Kalifornia, so when I drove over the Bay Bridge into San Fran - the cranes and apartments going up absolutely SCREAMED bubble.
New buyers will have a great time paying thousands of dollars a month in property taxes.
And renters who may be enjoying the new 'app' & 'gig' eCONomy are likely house-poor.
Part of being young and not caring though. Living $5k paycheck to $5k paycheck will make for great stories.
You mean like all the oilfield guys down in Alice Texas who're having their trucks reposessed?
Great move dumbass roughnecks, couldn't even save a car payment out of those checks? Repo guys are happy though, but I'll bet they're smart enough to save.
it's all chinese money...
sf is a magnet for asians
Builders are still slapping up 2100-2500 sq ft inner city (well gentrifying neighborhoods) and people are buying for 450K. Insane. That is 75K more than the exact same house sold for exactly 2 years ago.
This is actualy one of the few areas of true growth; rebuilding old inner city housing stock as people rediscover the simplicity of city living and walkable urbanism. As long as HUD doesnt move a section 8 family onto your block that is.
This is actualy one of the few areas of true growth; rebuilding old inner city housing stock as people rediscover the simplicity of city living and walkable urbanism. As long as HUD doesnt move a section 8 family onto your block that is.
Lag, where $38 oil translates into just a ten cents drop in gasoline prices.
The bigger the industry, the bigger the lag because there's no competition to force them to pass along those savings.
$1.95/gal for regular at the Shell station on Line Avenue in Shreveport last Saturday.
Just about every Road in my city is currently under construction. Also a $1 Billion football stadium is under construction. Plus, in Seattle there is a building boom in downtown towers to house and feed and provide cubicles for all of those Amazon workers.
Not a lot of wood is used to build those things.
Why use wood when there's Pressed Paper Covered Chalkboard wrapped in Plastic? Nothing could possibly go wrong, could it? :) MF
Bullshit Droogs,
We know that lumber use in construction applies mostly (if not exclusively) to single family housing.
To compare lumber prices (which are interesting) with construction spending is a weak argument.
Why?
Construction spending is a lagging indicator of what really?
What about commercial lease rates by city (or zip code) as a lagging indicator for commercial real estate? What about the raw land prices? Palo Alto, CA dirt ain't the same as Wichita, KS dirt, or Manhattan, NY dirt...
Who has time for this shit?
Your local reports tell us more about the real estate bubble reality than these bullshit, weak, and questionable, 19th and 20th century comparables of lumber vs. construction spending.
form work, sheathing, temporary barriers
Baltic Dry has been the only thread of truth to measure by these bizzare days.
http://www.dryships.com/pages/report.php
Take a look at the Panamax and Supramax ships dwindling and the today and year ago numbers, yeah we're fucking living the dream or nighmare whichever your perspective.
You can bulshit a lot of info but the BDI tells truth and materials/goods ain't fuckin movin to well folks.