Housing Starts Slide In Latest "Housing Recovery" Disappointment; Permits Rise On Expectations Of Rental Surge

Tyler Durden's picture

Today's housing starts number is merely the latest datapoint confirms the housing bottom callers will be once again early. In March, housing starts, expected to print at 705K (which is crawling along the bottom as is, so it is all mostly noise anyway, but the algos care), came at a disappointing 654K, the lowest since October 2011, and a third consecutive decline since January. Want proof that the record warm Q1 pulled demand forward? This is it. As the chart below shows, the all important single-unit housing starts have not budged at all since June 2009. So was there any good news in today's data? Well, housing permits, which means not even $1 dollar has been invested in actually 'building' a home soared to 747K, from 715K in February, and well above expectations of 710K - the highest since September 2008. That a permit is largley meaningless if unaccompanied by a start, not to mention an actual completion goes without saying. However, what is notable is that even the permit dat was skewed: single unit structures came at 462K, lower than February's 479K. Where the ramp was in 5 units or more, aka multi-apartment units, aka straight to rental. It appears that now everyone is piggybacking on the administartion's REO-to-rent plan, and instead of buying "home to buy", all future constrcution will be apartments to rent. Which is great: since rents have been going up, builders are already redirecting their attention to the one segment in the market that is not moribund. As a result, in a few short months expect a glut of rental properties, which will kill even the incipient possibility of a recovery, as the supply drowns any latent demand, as more and more households shifts from owner to renter mentality.

Housing starts: single vs multi-unit. One can be excused for confusing the all important red line for a flat line. It is.

As for permits, note the increasing spread between single and total units, or in other words, the implicit bet on an increase in rental demand:

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Gully Foyle's picture

Wouldn't that be an "unexpected" disappointment?

junkyardjack's picture

Bullish on me getting a new apartment when all those condos that have been going up like weeds convert to $800 a month rentals

ihedgemyhedges's picture

I live in an MSA with about 300K population.  MASSIVE apt complexes being built all over the area.  Single family construction is in a depression...............

SheepDog-One's picture

'Projects'. And look how futures just love it! Opening up almost the standard +1%....centrally controlled fascist dictatorship.

ihedgemyhedges's picture

Not all projects.  3 of the bigger sites I've seen are high end and gated.  Tells you about folks with enough to pay large rent not wanting to own their own house...........

Whoa Dammit's picture

Even the "high end" multifamily developments are projects. They are built with tax exempt federal bonds requiring a certain percentage of occupants to be low income. 


"Developers who agree to set aside a portion of a financed project’s units for low or very low income tenants are eligible for tax-exempt financing. A minimum of 20% of the units must be set aside for individuals earning no more than 50% of the area median income. Alternatively, developers have the option of providing 40% of the units to individuals at or below 60% of the area median income."

slaughterer's picture

Google images for "Plattenbau" and confront your future USA.    

Dr. Engali's picture

I certainly hope you are wrong,but my suspicions are that you probably aren't.

GeezerGeek's picture

Those images look like they came from the Soviet era 'workers' paradisc', or maybe even the Cabrini-Green fiasco in Chicago.

Dr. Engali's picture

My daughter ,who is 13, is heavy into the hunger games books and movies. I thought it would be a good tool to enlighten her . I use the books to draw parrallels with agenda 21. Funny thing is for the first time ever my wife is paying attention to the conversation.

Chupacabra-322's picture

Good to hear.  Turn her on to this;

Agenda 21 is Sustainable Development, and was created through the United Nations. It is the blueprint for depopulation and total control, under the banner of saving the environment.  It is like the head of a beast that has thousands of tentacles, originating from the United Nations.


benb's picture

And let’s not forget the “UN” is just a front for the Global Crime Families. The same criminal psychopaths that control the U.S. military, the Federal government, poison our water, poison our food, and create the environmental frauds like the World Wildlife Fund, as take-over cover.

Snakeeyes's picture


Mostly multifamily. Single units fairly flat.

Glad that Fed policy is working so well!!!!!!!!!!!!!!!!!!!!!!!




Toolshed's picture

Hey Lee Addled......talk some more shit please. We all need a good laugh.

cossack55's picture

I will be building a new home as soon as I can assemble enough cardboard.

SheepDog-One's picture

Hey at least Spring has sprung.

jus_lite_reading's picture

Where's good old Bob "I want to sell my house so I'm writing bullish articles" Brusca when you need him?


monopoly's picture

And these insolvent builders are building single family homes because.....?

Eugend66's picture

..... because spending their monies now on something tangible is better than what is in store for them (non-TBTF).

jus_lite_reading's picture

.... because theres not enough inventory or shadow inventory to last twenty lifetimes?

SheepDog-One's picture

Housing has been Brusca'd, he top ticked that like a pro.

But 'dissapointment'? Futures look like they gobbled a handful of Viagra. 'Markets' 100% broken.

GeezerGeek's picture

Who should be called if the rise in the SPX lasts more than four hours?

Dr. Engali's picture

It's looking more and more like the fed will be loading up on MBSs when they do QE3.

Hubbs's picture

Wait a minute, so now we go from housing boom/bubble  to apartment boom/bubble? After all these rental units get built, the supply will exceed demand (families consolidating acrosss the generations into one housing unit) and guess what? Rents will start dropping too.  A mini echo of the housing boom/bust to follow?

WonderDawg's picture

That's the way I see it, too. One of the reasons I'm not looking to get into the rental business. That and I expect difficulty in collecting rent in the future.

MachoMan's picture

Collecting rent is largely a function of weeding out prospective tenants on the front end (credit check, deposit, instinct, etc.)...  but, even if you don't collect rent, you simply need to own rental units in a jurisdiction that is landlord friendly (most are, given there isn't much of a tenant lobby).

How far your market will fall is anyone's guess, but clearly it WILL.  As a result, don't pull the trigger until you get a deal cheap enough to mitigate the risk.  For me anyway, there ARE some deals out there, it's just that they're few and far between (at best).

GeezerGeek's picture

Isn't overbuilding of real estate a big part of Spain's problem? So which are we destined to be, Greece, Japan or Spain?

TideFighter's picture

The buy way less than market and sell at less than market is hot.

Village Smithy's picture

The more rental units that are built the less demand for those single family units that are currently flooding the market. Good luck with that.

SheepDog-One's picture

Finding a shitty noisy apartment to rent that you can afford with your govt check and still have a bit left over for some food....the new american dream.

Village Smithy's picture

That's OK, once we are confined to apartments we will once again start to discuss things with each other face to face, like we use to. Electronic eavesdropping of the internet and cell networks will become much less effective.

VisualCSharp's picture

Very well said, SheepDog. It's a simple matter of affordability. With so many Americans on food stamps or other forms of implicit or explicit welfare, is it any wonder folks can't afford a mortgage or don't have adequate credit for one? I think single family homes will once again return to being a luxury, much like they were in the past.

MachoMan's picture

It actually is the american dream...  it's just for a select few who are happy to stuff the underclass into that type of housing...  and get them away from the gated communities...  the large complexes can also police themselves...  freeing up security forces to beat/jail straglers.

overmedicatedundersexed's picture

as quality of life and income deteriorates the people move from home ownership to apartments to trailers to tents to caves...bullish on those tent and outdoors furniture sellers

midtowng's picture

Wasn't it the housing bust that got us all into this mess? So why does anyone think that the bad times are behind us when the housing market is still dragging the bottom?

Hansel's picture

Just FYI, housing starts is another garbage data point.  It is a 'seasonally adjusted' annualized number with enormous error margins.

Privately-owned housing starts in March were at a seasonally adjusted annual rate of 654,000. This is 5.8 percent (±15.6%)* below the revised February estimate of 694,000, but is 10.3 percent (±14.6%)* above the March 2011 rate of 593,000.

fonzannoon's picture

So the data is weak and futures are bright green. That would indicate the weak data=qe trade no? If so then why is gold and silver just sittin there?

SheepDog-One's picture

I think everything has just gone irrelevant, total central planning, total fascism.

fonzannoon's picture

Yeah at this point it just feels like insanity.

orangegeek's picture

The Philadelphia Housing Index has been moving sideways since 2009.  This is not a bullish move, but more of a corrective move to the collapse that started in 2006.


The next leg down of this Housing Index should follow the Dow Jones pattern down:



Mitch Comestein's picture

All those 'new' landlords buying the dip are going to be in the house of pain in a few years.  Prop tax up, repair costs up, rents down.


Mercury's picture

Ben prints dollars, Barry prints voters.

Behold the expansion of the fiat voter base.

The (especially this) government  actually loves a bias towards renting because that usually means more Section 8 housing.

A vote from someone on food stamps and in government controlled housing counts just as much as a vote from a middle class, long term wealth building homeowner.  Guess which one is easier to produce?

It's only a matter of time before Obama starts referring to Americans who are lifetime net takers of government funds as "stakeholders" in government.

zonetraders's picture

http://capital3x.com/think-tank/technical-charts-patterns-and-lower-high... Latest technicals charts for SPX to 1375 before the next wave of correction

banksterhater's picture

charts MEAN NOTHING w/ Fed intervention using Primary Dealer Cartel.

TheFourthStooge-ing's picture

More crapital3x spam fromfuckhead spammer zonetraders.


Shizzmoney's picture

Vacancy rates are out the wazoo for a few reasons:

A) The cities with reasonable unemployment, like Boston (around 6.9-7%), happen to have high costs of living.  This eats into earners income, especially ones under 40.  That means no confidence to take on a mortgage (unless mommy and daddy pay for it) and more renting (on top of the fact that the median income has remained flat these past few years....some have even suggested lower).

B) Young generations, 18-35, are putting off kids due to student loan and credit card debt (esp the smart ones).  Less families=less demand for houses.  We all don't have Scrooge McDuck Capital.  On top of that, in areas where there are some good earners, the market is completely skewered to them.  Meaning, more houses for rich people, and less for middle class/poor people.  Which maybe forces some fiscal responsibility.....but our economy is built of housing values rising, and construction of new property due to demand.  And that ain't happenin'!

This also means more renters, and more property being consolidated to tycoons and corporations.  Smell that fascism!

C) Why would anyone with a shaky income/job prospect outlook, but smart enough to you know, read the paper, ever fucking sign ANYTHING with a bank at this point?  Renting is almost even considering a more "free" option: no worrying about losing the value of your home; the worry of flipping/selling it (if you can find a new job) and not getting screwed out of value; and of course, the potential rising interest payments.  

People are slowly, but surely, decoupling themselves from finanicial serfdom.  I am, at least.  That means: no credit cards, no house, and even no car.  People are sick of the harassment and the finger fucking of our wallets.  We deal with enough from the gov't; we don't need the 3 finger treatment from the private sector.

prains's picture

The great thing about builders converting to wood framed mulit story walk ups is they take their already shitty building techniques and mass produce it on a greater scale. Leaky, moldy, windy,cold and noisy is the new normal.

banksterhater's picture

They're overbuilding rentals, like the last bubble, free money ZIRP malinvestment. Those hedgefunds buying GSE for rent will dump a lot more in.