sequoia512 writes:
Adjusted for a larger population these numbers er suck. However we are not anywhere near the bottom. These jokers could not build for 2 yearsand we would still have to many houses to sell.
sequoia512 | 03.18.08 - 9:02 am | #

lawyerliz writes:
Is our population bigger, given that a lot of our shadow population may have gone back to Mexico?
lawyerliz | 03.18.08 - 9:06 am | #

k harris writes:
There has been a very rapid rise in multi-unit starts the past couple of months. The traditional view, as I understand it, is that starts are good, but that multi-unit starts are more noise and less information than singles. The thing that worries me is that the sharp rise in multis (+19.7% y/y) comes despite tighter lending standards for commercial real estate and a glut of unoccupied housing. What are the odds that the pick-up in multi-unit starts right now represents not good news, but rather a mistake that will add to the pile of empty units and bad debt in the future?
k harris | 03.18.08 - 9:08 am | #

SC writes:
On a population adjusted basis, are the current results worse than '90 or '81?

Does population growth matter on these numbers?
SC | 03.18.08 - 9:09 am | #

eh writes:
...2) that single family starts are now low enough to begin to reduce the inventory of new homes for sales.

Actually, with foreclosures running ahead of sales in some areas, I wonder about this, or at least the extent and meaningfulness of it.
eh | 03.18.08 - 9:13 am | #

trail writes:
I think that even with some migration back to the Latin American countries, our population has increased considerably.

http://factfinder.census.gov/hom...n.html? _lang=en

Current population estimated at 303,657,656.

1991 population estimated at 252,153,092.
trail | 03.18.08 - 9:14 am | #

mattyinVT writes:
builders around here say that, because of the long process, they will push forwardon the belief that it can all change by the time to put shovels in the ground. by the way, that long approval process has largely kept us out of the boom/bust cycle.
mattyinVT | 03.18.08 - 9:16 am | #

Kp writes:
Our visitors from Mexico have not all gone home. They are just moving on to other lines of work. Instead of doing a shitty job working on your house or picking your produce...now they are gonna be f$$king up your municipal and state funded subcontract work on your infrastructure...your roads, your BRIDGES, your utilities.
Kp | 03.18.08 - 9:17 am | #

mattyinVT writes:
of course the builders still bitch.
mattyinVT | 03.18.08 - 9:18 am | #

wally writes:
I haven't seen any increase of multi-unit buildings in this area, but that's anecdotal - I haven't looked for statistics. I'm not sure it would be a wise time to build them. We really don't have a situation where there is a shortage of units. In fact, there is a surplus of houses now that will keep getting cheaper.
One thing I'd say is that the large number of foreclosures is very likely to leave banks with a massive inventory of marginal and deteriorated units. They are junk - nobody wants them as they are and the costs of renovation exceed what is justified. I'd predict some large-scale government programs in a few years to try to deal with this. Lots of cities are going to have areas that look a lot like parts of Detroit do today.
It is partly a consequence of the way we build. American houses are temporary, mostly, and when they get run down, you have to deal with it on a greater scale than case-by-case.
wally | 03.18.08 - 9:22 am | #

tj & the bear writes:
Neither chart shows any sign of the downward trend moderating at all. I'd also note that the current decline is apparently steeper than all prior. Brutal.
tj & the bear | 03.18.08 - 9:25 am | #

Journeyman writes:
I am glad they weren't temporary in 1927 when my house was built.
Journeyman | 03.18.08 - 9:26 am | #

tj & the bear writes:
Lot of multi-units finishing in L.A. No doubt many were intended to sell but pretty much all are now rentals. The rental rates would probably reflect it if they weren't all high-end units, skewing the numbers.
tj & the bear | 03.18.08 - 9:28 am | #

d.boon writes:
Wally,

You're right on about junk foreclosures: http://www.startribune.com/local...l/ 16767116.html

"One third of foreclosed houses in North MPLS are candidates for demolition."
d.boon | 03.18.08 - 9:30 am | #

firefox user writes:
you fixed it for FIREFOX YEAH!

Oh, and I saw housing starts for 2004 in Broward County Florida (or was it 2003?) something like under 500 for the whole year. (No cite, sorry, this was a couple years back when I was trying to figure out why there were more "new home" communities in Dade and Palm Beach.)

Which only caused older homes to be valued even higher ... and then get smashed by Wilma (Broward hadn't been hit in 60 years when she tore through).

Now if starts had stayed low, would that be good or bad for that county? I noticed a bunch of ads for new home communities after that - some built, some not.
firefox user | 03.18.08 - 9:32 am | #

J.Goodwin writes:
Multis are frequently going to be Section 42 tax credit projects, with a strong LIH component. They could be rentals, but they could just as easily be condos.

Sales of LIH units are going to be strong at this time, and the incentive credits along with local LIH project loan incentives typically make these projects highly profitable. Of course, the regulations ensure that profits above a certain level are split with localities generally, but this is a good shelter in a bad storm.
J.Goodwin | 03.18.08 - 9:38 am | #

Matt writes:
I noticed that '08 and '09 are now shaded in on the graph. That makes the recession official to me!
Matt | 03.18.08 - 9:52 am | #

Fair Economist writes:
The fundamentals of multiunit rentals are very good. We have a considerable oversupply of large SFRs and and undersupply of rentals compared to what surveys indicate people want. I also think there's going to be a large demand for middle-class multifamily rentals in the 3/4 bedroom range due to the housing crash and that market is very small at present.
Fair Economist | 03.18.08 - 9:56 am | #

wally writes:
"I am glad they weren't temporary in 1927 when my house was built."

If you were to compare against current building codes, you'd likely find lots of problems: no egress windows, inadaquate insulation, substandard wiring, too-steep stairs, lead paint, etc., etc. If the house is in good condition, these things are not issues. If you are a bank and have to fix the place up, you'll have to address all those issues and you'll find it to be an unprofitable task.
wally | 03.18.08 - 9:56 am | #

wally writes:
Fair Economist,
But can you build those cheaper than people can buy single family homes that have gone through foreclosure... or that have not, but have to sell cheaply because of market conditions?

The Low Income Housing... yes, a strong future there, but even getting funding for those has become a challenge. For instance, non-profits building low income housing in this area get tax credits and sell them as a funding source, but they can only get about 80% of the price they got 2 or 3 years ago.
wally | 03.18.08 - 10:01 am | #

J.Goodwin writes:
Wally,

My primary work is reporting on Section 42 projects (cost certs and financials). There are companies that specialize in new construction or rehab that are quite adept at self-financing. If sales are strong, then mortgages may not even be necessary or at worst are going to be short term unless the project sells very poorly (which it could...depends on the area).

It might surprise some people how much of certain large investment houses activity is in multi-family housing and LIH rentals at the moment. There has been rapid expansion of the industry in the last three to five years thanks to certain insightful parties.
J.Goodwin | 03.18.08 - 10:07 am | #

deuces wild writes:
"...What are the odds that the pick-up in multi-unit starts right now represents not good news, but rather a mistake that will add to the pile of empty units and bad debt in the future?"

IMHO, those are HIGH odds.
deuces wild | 03.18.08 - 10:09 am | #

Elvis writes:
This rapid decline in permits is exactly what needed to happen. Unfortunately, the oversupply is so huge that it will take several years of near inactivity for supply and demand to reach equilibrium. However, at least, things are in the process of getting fixed. Too bad the fix probably won't be over until 2014. That's six more years, if you are counting.
Elvis | 03.18.08 - 10:26 am | #

Jas Jain writes:
--
CR,

Didn't you forecast that New Home Sales would bottom at 600K? My forecast has been for a new low below 400.

You continue to suffer from bad estimate of the demand at 1.7M annual units. I am amazed at your ignorance of the economy as it affects housing demand during the last cycle (2001-2007). When was the last time you looked at the employment growth and real household income growth during the 2001-07 cycle? They both sucked and yet you estimate demand at bubble price levels to be 1.7M? You need to stop posting too much data and start to do some thinking about the important data, such as, employment and income growths. Then, you will be able to make good forecasts of the bottom in housing. Got it??

Jas
Jas Jain | 03.18.08 - 10:35 am | #

Elvis writes:
Jas,
You have as much charm and tact as a rabid pitbull. You can make your point without using such hostility.
Elvis | 03.18.08 - 10:39 am | #

Dirk van Dijk writes:
Our visitors from Mexico have not all gone home. They are just moving on to other lines of work. Instead of doing a shitty job working on your house or picking your produce...now they are gonna be f$$king up your municipal and state funded subcontract work on your infrastructure...your roads, your BRIDGES, your utilities.
Kp | 03.18.08 - 9:17 am | #

KP, those mexicans tend to work their butts off, and poor quality in housing is more the fualt of the materials and the design (which is not done by the illegals) not the people hanging the wallboard. Turn off Lou Dobbs and look at the real world.
Dirk van Dijk | Homepage | 03.18.08 - 11:00 am | #

Matt writes:
haha Dirk so true, they do work so hard and want more in life then most Americans do. And they are willing to go after it, not wait for it.

For real KP, if they get those jobs it's because they earned them. Too bad for you that most politicians are cheaper then they are racist.
Matt | 03.18.08 - 11:02 am | #

TCA writes:
Not only that Matt, but they have strong family ties. They take care of their own. Those jokes about 20 Mexicans in a 1500 sq ft house are true to some extent because they want it that way.

I've had it with the inherent racism regarding Mexicans. As a whole, they are a hell of lot more admirable than the majority of gringos I know.
TCA | 03.18.08 - 11:08 am | #

David writes:
The house built in 1927 might have substandard windows and wiring (which are easily fixed), but at least it has solid floors, foundation and walls. Heck, I bet even the roof has only been replaced once or twice.

So many new homes built are just wretched quality they need to be torn down the day after they're built--it's a royal pain to fix the cracked foundation, sagging walls, roof leaks, etc.
David | 03.18.08 - 11:27 am | #

Fair Economist writes:
Wally: Hard to say if the oversupply of houses will kill rentals. At least here in California, however, there's a big mismatch between the huge and remote houses that were built and the small and medium conveniently located homes that will be demanded. A tough 1 hour+ commute is plausible if you're hoping to strike it rich on your house but you don't see rent differences that would justify that kind of torture.

In areas that have seen condo booms those will convert nicely into the kinds of apartments needed. Prices will have to drop a lot though.
Fair Economist | 03.18.08 - 11:28 am | #

Vertical Drop writes:
J.Goodwin writes:
Multis are frequently going to be Section 42 tax credit projects, with a strong LIH component. They could be rentals, but they could just as easily be condos.

Sales of LIH units are going to be strong at this time, and the incentive credits along with local LIH project loan incentives typically make these projects highly profitable. Of course, the regulations ensure that profits above a certain level are split with localities generally, but this is a good shelter in a bad storm.
J.Goodwin | 03.18.08 - 9:38 am | #


Long time lurker...first time poster.

I don't think LIHTC projects will be a shelter in the storm at all. The primary purchasers of Low Income Housing Tax Credits are ..........Fannie, Freddie, and commercial banks who are either currently swimming in losses or soon will be. As such they have no need for credits to offset income. Fannie and Freddie have guided that they are out of the LIHTC market in 2008 and more than likely out for 2009. C and BofA have also guided that they will not be purchasing credits. These firms, from my limited insight, are also guiding that they may be selling previously purchased credits as they have no use for them in the near future.

This reduction in demand for tax credits is placing significant downward pressure on pricing and reducing one of the largest funding sources for low income housing deals. Tax credit syndicators are hesitant to forward commit to equity pricing on the tax credits until the bottom is determined.

Municipalities are being asked to provide a larger percentage of LIHTC deal funding through "soft" sources such as CDBG or HOME dollars.

The net of all this is that the number of LIHTC deals will be diminished and the margins on these deals will be cut to the bone in order to make the deals work in this current funding environment.
Vertical Drop | 03.18.08 - 11:28 am | #

ATL writes:
Can anyone recommend a good housing blog. One where people talk about their situations and what they are doing. Thanks.
ATL | 03.18.08 - 11:50 am | #

FT Woods writes:
CR,
Would it be possible to add a line for permits to the charts?

Vertical Drop,
Thank you for the info on tax credits.
FT Woods | 03.18.08 - 11:54 am | #

Jas Jain writes:
--
"You have as much charm and tact as a rabid pitbull. You can make your point without using such hostility."

Elvis,

This is a part of ongoing fight between CR and I whereby he has repeatedly IGNORED the actual data on actual demand published quarterly by Census and keeps on maintaining his bogus estimate of demand at 1.7M. Even NAR acknowledged that the household formation during 2007 was half of their estimate. CR does not believe is reconciling his estimate with the actual survey data and that is a very bad habit for someone who calls himself a scientist.

Some people don't correct their mistakes and have to keep paying the price for the mistake.

One day this war is going to end and that day is when CR admits that his estimate of the demand is wrong, way too high compared to the reality.

Jas
Jas Jain | 03.18.08 - 11:54 am | #

Jas Jain writes:
--
"Does population growth matter on these numbers?"

NO. The household formation matters. The price of homes matter the most! Employment growth matters (it has been worse since the Great Depression). Real incomes matter (they have been worst since the Great Depression).

Jas
Jas Jain | 03.18.08 - 11:56 am | #

SteelCurtain writes:
@ATL

Try http://thehousingbubbleblog.com/....com/ index.html
SteelCurtain | Homepage | 03.18.08 - 12:01 pm | #

Worried writes:
Jas Jain

I dont understand you.

You insult CR and you insulted Tanta really very badly last year.

You say everybody are dopes.

And even imply you were a dope to vote for Bush and had other dopey beliefs.

Why not be kinder and gentler on everybody?

People around here obviously respect your point of view more or less (now)

People have said a few times:

"We are all Jas Jain now"

An obvious complement to you.

Why not cut people and yourself some slack and loosen up a bit?

You must be by now sitting on an enormous pile of money!

Who you can spend it with if everbody including yourself is a dope?

Come on!

This is a good blog and you know it.

Nothing and nobody is perfect.

It is the way things are.
Worried | Homepage | 03.18.08 - 12:25 pm | #

Deflationary Jane writes:
People don't tend to look at the components of Pop change. USC hasn't been really pushing it's numbers like they used to. I'm still waiting for county data but they did do a stealth release in Dec for states data.

California: 7/1/06 to 7/1/07
Total pop change 303,343
Births 569,897
Deaths 240,941
International 233,810
Outmigration -263,035

We also want to look at household creation and family size data but they haven't released that either.
Deflationary Jane | Homepage | 03.18.08 - 12:32 pm | #

Jas Jain writes:
--
"It is the way things are."

Worried,

I comment on "the way things are" as opposed to what some others say they are or the manner in which others want me to say.

ALL ECONOMIC AND POLITICAL COMMENTARIES ARE ABOUT PEOPLE, INDIVIDUALS AS WELL AS GROUPS. AND PEOPLE DO BEHAVE BADLY OFTEN ENOUGH!

My conclusion is that Americans are BRED to be dopes with blind faith in the econo-political system even when the system has been taken over by proven Crooks – Bankrupters and Fraudsters of New York City. Something that we are witnessing on a daily basis these days, no?

American propaganda has rendered the broad population dopes in terms of fundamental problems with the democratic system itself whereby dopes go to polls to sanction one of the agents of the Crooks.

Economists are very much part of the Propaganda Machine and CR is very much part of the propaganda that gave rise to the Housing Bubble by inflating the estimate of the demand, the most important parameter. If CR’s estimate was anywhere close to the actual demand we would not have the excess inventory that we have today. What I am after is CR’s continuous refusal to reconcile his estimate with the Census data. He keeps on making optimistic estimates because he is dead wrong on the demand.

Jas
Jas Jain | 03.18.08 - 12:48 pm | #

Worried writes:
Jas

If you think CR is part of the problem then we see things differently.

Instead of talking about crooks and stuff how about some details......or do you prefer to only be scared like everybody else
Worried | Homepage | 03.18.08 - 1:02 pm | #

J.Goodwin writes:
Vertical Drop,

This is true, but not everyone is losing money in the investment industry, just mostly everyone :D It is a major problem though.
J.Goodwin | 03.18.08 - 1:13 pm | #

homedad43 writes:
Worried:

Note the sign:

"Please do not feed the troll."
homedad43 | 03.18.08 - 1:18 pm | #

Justus Somus dumbus guyus writes:
Worried, some of what Jas says is unfortunatly spot on. 99% dont get it because they dont see it..they are the dancing with the stars , tmz, deal or no deal crowd....

thats how we are raised. Its in our schooling from early on. then some of us are educated in these areanas.

then a few, are interested and bump into blogs like these and learn, soak it in. all points of view and reputations.

Jas is right on many points, brash as he might be at times. But curt is not always a bad thing...in his own way he is teaching his class in his way....
Justus Somus dumbus guyus | 03.18.08 - 2:16 pm | #

Justus Somus dumbus guyus writes:
Jas states:

Economists are very much part of the Propaganda Machine

How many times on this blog have we learned that 29 out of 30 economists surveyed missed itmonth after month...

"and CR is very much part of the propaganda that gave rise to the Housing Bubble by inflating the estimate of the demand, the most important parameter."

I disagree...the demand was there or the appearance , the non approvable demand was there, the builders kept building.... the only reason we have the excess inventory is the HB's had the starts in the works prior to the lending guidance came out last March.

If CR’s estimate was anywhere close to the actual demand we would not have the excess inventory that we have today. What I am after is CR’s continuous refusal to reconcile his estimate with the Census data.

Census data lags... Consensus data if propaganda...i dont think anyone knows the numbers..

He keeps on making optimistic estimates because he is dead wrong on the demand.

the demand is there we are just watching and waiting, some cant get loans, some cant sell, its old school now with a loose inventory
Justus Somus dumbus guyus | 03.18.08 - 2:23 pm | #

Justus Somus dumbus guyus writes:
75 bps
Justus Somus dumbus guyus | 03.18.08 - 2:23 pm | #

layperson writes:
Why is it that Bernanke lowers the rates but the banks haven't lower the rates for home loan. In a bubble area (where I live) this isn't helping matters. Is there a method behind this madness or want don't I understand. Be kind.
layperson | 03.18.08 - 4:14 pm | #

tg writes:
If Jas Jain says that the system has been taken over by the 'fraudsters & bankrupters of New York City', he doesn't really have much insight with that narrow accusation.
The clerks and administrators of powerful international wealth are the front line of the process where wealth is transferred up to the highest levels with some fees & salaries paid for management and processing of concentration of true wealth held by families not mentioned in the Fortune 500.
tg | 03.20.08 - 3:19 am | #