Housing Recovery False Alarm - Starts, Permits Plunge In July As Rental Units Collapse

Tyler Durden's picture

Following June's huge surprise jumps in Housing Starts (revised lower) and Building Permits (revised notably higher), July saw both starts and permits plunge (-4.8% and -4.1% respectively) dramatically missing expectations. The majority of the plunge is driven by multi-family starts crashing 35.2% YoY to its lowest since Sept 2016.

 

Permits' 7.4% June surge was revised up to a 9.2% spike (the biggest since Nov 2015) before July's plunge.

 

Multi-Family Starts plunged to the lowest levels since September 2016...

 

This is a 5.6% slump in Housing Starts...

With Multifamily starts crashing 17.1% sequentially and 35.2% year-over-year - this is the 5th month in a row of year-over-declines...something that hasn't happened outside of recession

 

Permits drop was also dominated by multi-family...

 

The Northwest and Midwest saw over 15% crashes in starts MoM but The South dominates the trend with a 16.5% collapse year-over-year.

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spastic_colon's picture

over built apartments about to get some reality........rents may be stabilizing and closer to equilibrium with the upcoming no-down mortgages.......full circle now that .gov got all the crap proprties off of their hedgie buddies balance sheets and back into the hands of retail.

Fizzy Head's picture

You will never lose money in real esate... oh wait.. 

currentsea's picture

You will never lose money in bitcoin... 

Silver Savior's picture

Will eventually lose your ass in Bitcoin but a bunch of altcoins you can't go wrong.

LawsofPhysics's picture

"subprime is contained" - Ben Bernanke

 

"We would never directly monetize the debt" - Ben Bernanke

 

"Once unemployment goes below 6.5% we will begin to normalize interest rates" - Ben Bernanke

 

How is this treasonous fuck still alive?

 

"Full Faith and Credit"

GUS100CORRINA's picture

Presented without comment.

No.904: Economic and Financial Market Review, July Consumer and Producer Price Indices

August 13th, 2017

• A L E R T

• U.S. Dollar and Equity Markets Face High Risks in the Near Future, with Impact of Deteriorating Domestic-Economic Activity Exacerbated by Domestic- and Global-Political Circumstances

• Residual Squirreling Instincts in Investors: 2017 Circumstances Are More Dangerous Than in 1987

• U.S. Dollar Has Turned Down Year-to-Year

• Continued Headline Economic Slowing and Contraction Ahead

• Physical Holdings of Gold and Silver Offer Store-of-Wealth Hedging, Liquidity, Safety

• July CPI-U Inflation Monthly Gain of 0.11%, Pulled Annual CPI-U Inflation Higher to 1.73% (Was 1.63%), withCPI-W at 1.64% (Was 1.50%) and ShadowStats at 9.4% (Was 9.3%)

• Softening Annual Consumer Inflation Appears to Have Troughed, Temporarily

• July 2017 Annual Final-Demand PPI Slowed to 1.90% from 1.99% in June

Silver Savior's picture

Hope they all lose their asses this time.This is one horrible investment because it's fleecing people for personal gain. If only landlords knew what renters really think of them. 

leefool's picture

Noone puts a gun to renter's head. Do not want to rent - do not rent it. Fleecing? You can say that about any service that others providing. Doctors? Fleecing. Lawyers? Fleecing. Breadmaker? Fleecing. Laundramat? Fleecing. Taxi? Fleecing. Did i miss anything?

Paul Kersey's picture

Building lot prices and labor costs have skyrocketed to the point where building multifamily or single family has become unprofitable.

Snaffew's picture

here in upstate ny...a helper on a subcontractor's construction crew gets $25-$30/hr cash---that's the minimum for a low tier competent worker.  People get mad when you give them a price for a job...they yell at you sometimes for making more money than they do.  They usually are sitting at a dsek or computer typing and skyping. That's not difficult or hard work. People get confused easily about pay scales versus labor and production.

j0nx's picture

Um no, construction is still considered manual unskilled labor and no, blue collar illegals should not be making more money than a lawyer or dentist who went to school for 8 years which right now many or most of them are. Some of the prices I get quoted for jobs are out of this world. I just tell them to F off not interested in their robbery. The trades are out of control right now with their prices and they are way past due for a comeuppance.

LyLo's picture

None of those trades were hiring for about a decade.  Now, especially that we've gotten rid of a few... ahem... extra helpers... they seem to be having a hell of a time finding employees at all for the super-low level stuff like carting around materials and what-not.  Now, historically, those low-level helpers would have been "apprentices" that would inevitably become the skilled artisans of tomorrow.  However, I guess for whatever reason... ahem... taxes, prevailing wage laws, and healthcare... they chose to stop using that system.

Now, they all seem upset that none of us went to school for whatever stupidly specialized education they claim to require.  Problem is, why go to school for a trade if your chances of working in that trade are zero?  Besides, much of the "schooling" that happened the last decade was basically just kids spending free .gov money to get their parents off their back for being unable to find a job...  And how would going to work with your hands compete with "becoming a nurse" when most of what you are doing is just trying to impress friends and family with no hope for future employment?

So, the instant they get off their high-horse of "needing schooling" to do these dumb menial tasks, they might not even have to pay those people $30/hr just to have anyone show up. 

For the record: I recently offered to help out a friend who's rather high up in an HVAC company, as they could not find people to dig a hole.  And I'm like, fuck I can dig a hole, especially for like $15/hr, and if it helps you out, great!  He's like, no, it's for $30/hr (we're talking the lowest level workers, here) and no, I can't do it, because they need people with a degree in HVAC repair.  I'm like, but it's digging a hole...  

So, they ended up flying people in from another state and paid them $40/hr, and acted like that was the only possible solution.  And I lost every ounce of sympathy I had for their situation, and look forward to fixing my own damn air conditioner when it breaks if this is how they insist on operating.

A_DAB_will_do's picture

Logged in just to reply to this comment.  A job pays what the market will bear.  Right now physical jobs, like carpentry, masonry, plumbing, and electrical installation are out of favor with younger generations.  A shortage of these skilled laborers means that they will earn a higher rate of pay.  They might even be more valuable than lawyers, college professors, and rocket scientists in some markets.  If you don't like what it costs to hire out the work, find someone less qualified who's willing to work for less money.  Live with the consequences.  Or, invest some of your own precious time and pick up a hammer/wrench/screwdriver, and do the work yourself.

 

I have a simple rule when deciding these things.  I know what my time is worth to me.  If it costs less per hour to hire it done, I do so.  If I can't do it fast enough, I hire it out.  If I can't complete the work to a high enough standard, I pay someone who can.  Everything else I do myself.  But at no time do I bitch and whine about it.

leefool's picture

to A_DAB_will_do: exactly. If you invite someone to work for you - they may ask as much as they wish or market can bare. Do not have the money - too bad. Earn it. Or do it yourself.

My simple rule when deciding these things - never hire a contractor unless state requires to be done by licensed contractor (like gas water heater installation). Everything else i do myself. You know why? Not becasue i can not afford to pay but becasue i do not want to see a moron stranger entering my house.

cherry picker's picture

And if construction slows down, as it is happening where I live, these people have no work.  It is not uncommon to see trade people without full time work for months at a time.

Silver Savior's picture

Then build it anyway for charity.

LawsofPhysics's picture

And yet, the rent is still too damn high...

 

"Full Faith and Credit"

 

Tick tock motherfuckers

Five Star's picture

Renter income has consistently been outpaced by rent since 2007

http://thesoundingline.com/chart-of-the-day-rent-versus-renter-income/

GUS100CORRINA's picture
NOT LOOKING VERY GOOD.
c2nnib2l's picture

"Something that hasn't happened outside of recession"

exactly :D 

 

go figure !

GunnerySgtHartman's picture

Oops!  Lies, damned lies, and statistics.

Dutch1206's picture

I'm in the market to buy a house within the next year or so.  A housing crash would be welcome.  If they could also lower interest rates to near nothing to "save" the housing market that would be great too.  I'd love to lock in a cheaper house with low interest rates.  

j0nx's picture

Hold your breath. Coming any day now... Played that waiting game for 4 years and prices only went up and up. Round 2 of the housing market will never come short of war or some other catastrophe and then it won't matter much anyway. FED has too tight a grip on the markets after 2008.

graspAU's picture

I was in the market to buy this past march. Bit the bullet and did it. Needed more space, and wanted into a state and county with much less prop taxes, slightly less income taxes, 30% lower house price than current location. Sometimes you have to make a move when it's needed and can't just hold out forever. Mtg rates still around 4-4.25% on a 30 yr. That's what I went with. Put down 40%, selling current home (no mtg) after moving, then more principal redcution from that and hope to pay off in 4 years. Another big factor in the timing is job stability, there isn't any of it any more, so an earlier purchase may avoid that mtg application problem of not having a job or very short new job history with a substancial income reduction.

Silver Savior's picture

There is nothing I want to see more than a full blown real estate collapse. Tired of the legal robbery.

On a second note I think having to put money down to buy a home is discrimination against the poor.I expect no money down @ 0% financing for 100 years. Payments should be no more than $50 per month. Then watch the houses move. It's all about appearances right? 

American Snipper's picture

There was so much money made in the last real estate bubble/collapse, they will keep doing it every 7-10 years for the rest of our existance...