MSM with hyperventilating headlines about housing starts, even though they declined. Even the guy at Calculated Risk is calling it a STRONG report. He is talking his book, as he has predicted a housing recovery for the last year and it simply is not happening. I deal with facts, not hope and storylines. Take a look at these charts and please show me the housing recovery. Housing starts are 70% below the 2006 peak. They are 50% lower than they were in freaking 1969!!!!! The population of the country in 1969 was 202 million. Today the population is 312 million. So we’ve got a 54% increase in the population and a 50% decline in housing starts since 1969. YEAH – that’s a housing recovery alright. The willfully ignorant public will not question the storyline of a housing recovery.
Administrator says:
Housing Starts Post Biggest Drop Since August 2011 As Permits Rise
Submitted by Tyler Durden on 06/19/2012 08:42 -0400
We just got another indication of how US housing has “bottomed”… if only in terms of promises and strong words. While permits, or promises that at some point in the indefinite future, a house will be built, soared from 723K to an annualized rate of 780K, the highest since September 2008, on expectations of a 730K print, actual holes dug, or Starts plunged from a revised 744K to 708K, the biggest miss of expectations of a modest improvement from the pre-revision number since April 2011, and the biggest sequential drop since August 2011. And while recently all the starts strength was in multi-family units as America prepares to become a renter society, in May it was actually the 1-unit houses that saw an increase from 500K to 516K units, as multi-family tumbled from 236K to 179K. So much for the REO-To-Rent plan? Finally, looking at actual completions, the number tumbled by 10.3% from an annual rate of 667K to 598K in May.
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19th June 2012 at 9:46 am
ThePessimisticChemist says:
I’m counting on it staying shitty.
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19th June 2012 at 9:49 am
Chicago999444 says:
I hope housing stays “crappy”, like it was in the 50s or 60s when you “invested” only for cash flow, not manic debt-driven “appreciation”.
Somebody, actually many somebodies, have said to me, “OH, I’ll just bet that the minute you buy, you’ll want the values to go up.”
Not really. That only drives up property taxes. Worse, when I go to sell, I won’t gain but will actually LOSE since I will realize a “profit” and that will be a taxable event, while the place I downsize to will have risen in price in proportion to my place, and rents will be higher. So take the gains and shove them.
Just keep all these Chicago condos nice and cheap so I can pay cash in another year. I don’t have far to go. Just don’t crank up the fake-money machine.
But that might already be happening. Looks like our government is covertly doing what it blatantly did during the Bush era, which is guarantee as many bad loans as a lender can crank out to anybody who can fake a bank statement. The “stated income” loan machine is being cranked up again. Read this:
http://www.housingwire.com/news/rancho-financial-brings-back-stated-income
Now, if Fannie and Freddie aren’t buying all these $500K “stated income” loans, who the hell is? Would YOU invest in them? Neither would I. Neither would anybody who didn’t count on “rescue” by a government entity. Note that the identity of the investor purchasing these loans is “confidential”. I can’t believe there is not some kind of government assistance involved here.
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19th June 2012 at 10:40 am
Patricia says:
This housing B.S. is exactly that. It’s a bunch of cheerleading by people who are probably in real estate. I’ve been seeing this in my local papers and it’s nonsense. Empty houses are EVERYWHERE. The prices of homes have been driven down by them, but not the taxes, oh hell no. I am fighting my assessment on my condo. It’s assessed for $100,000 more than I bought it for. I paid cash by selling my home that i did not use as a piggy bank. I never subprimed or ran up my credit cards and always lived within my means. No one knows what the value of the real estate market is worth, until they deal with the foreclosure mess. Just wait until the next wave hits. By the way, I was born in Upper Darby, not far from that 30 blocks you write about. It is really sad to see how bad it’s become. Like your blog.
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19th June 2012 at 12:42 pm
DaveL says:
East Valley outside Phoenix.
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19th June 2012 at 12:45 pm
ron says:
I think they well go much lower.If i were a homeless person i would squat in one of these empty homes. I think renting these empty homes with an option to buy would help keep them from becoming broken eye sores.
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19th June 2012 at 1:32 pm
Administrator says:
Housing Starts Fall (but look beneath the headlines)
By Barry Ritholtz – June 19th, 2012, 11:00AM
Housing starts fell 4.8% to 708,000 in May (consensus was 722,000). Starts for single family properties increased 3.2% m/o/m to 516,000 in May.
Note this returns us back to Spring 2010 levels of construction.
Despite some happy talk, you should not mistake this modest stabilization for a turnaround in the housing market.
Prior to the credit bubble, single family starts were trending at about 1.2 million units. During the mania, we saw single family starts near 1.8 million per year.
I am compelled to point out that Starts compete with distressed sales and foreclosures. While we are seeing improvement, much of this comes formt ghe Foreclosure abatement of the past year. That has ended, and Foreclosures (as measured by RealtyTrak) are once again rising.
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19th June 2012 at 1:51 pm
AWD says:
From Barry Ritholtz…(dueling Barry Ritholtz)
— There have been an average of 1.6 million nationwide foreclosure starts per year for the past five years.
— Foreclosure starts nationwide increased on an annual basis after 27 consecutive months of year-over-year declines.
— Bank repossessions are still down 18% year over year. Voluntary foreclosure freezes and increasing pre-foreclosure sales are the primary factors.
…2.8 million Americans are 12 months or more behind on their mortgages.
This truly amazing data point represents a very sad fact of the housing market. Once a homeowner falls that far behind in their mortgage, the odds are that they will never catch up. (Mortgage mods are likely to fail at an exceedingly high rate as well). Nearly all of these 2.8 million homes are likely to be some sort of distressed sale — short sale, auction, walkaway or foreclosure.
The bottom line is it means we are looking at a minimum of another 3 million homes going into foreclosure (or some variant) over the next few years.
Beyond the coming wave of foreclosures, credit availability is another factor holding housing activity down:
Since 2007, 19% of all borrowers (~9 million borrowers) have gone >90 days delinquent on their mortgages, or have had their mortgage liquidated.
In other words, one in five people who held or qualified for a mortgage not too long ago would not today. The 90 days delinquency on their credit reports prevents them from qualifying for a new mortgage.
This is a very significant data point to the idea of a housing turnaround. Why? Based on this delinquency alone, nearly all of these borrowers — about 9 million current homeowners — would be unable to qualify for [a] bank loan today. That is 9 million potential home buyers who are effectively barred from the market due to their credit scores. Removing that many people as potential home buyers amounts to a huge reduction in demand.
Isn’t that terrible? No, it’s just a correction correcting the overbuilding and overbuying in the housing market. And here’s more correcting….
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19th June 2012 at 2:35 pm
Colma Rising says:
Buy High, sell low! OPM!
We’ll be rich!
It’s the “New Era”!
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19th June 2012 at 2:41 pm
DaveL says:
A trailer across the bottom of the Bloomberg screen last night… “Arizona builders competing for workers.”
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19th June 2012 at 12:49 pm