The trajectory in starts, single starts, permits and single permits is less steeply downward now than through much of last year. That is what one would expect, after the base has contracted so far. As a simple mathematical proposition, we ought to see a slower decline. NAHB data have stabilized at a dreadfully low level, but stabilized, none the less. That, too, may mean a slower pace of decline in construction. Still a drag on the economy, though.
Might want to look at the Windy City for cheap housing. According to the Chicago Tribune the other day, they are forecasting that 10,000 (that's right, 10,000) new condo units will come online by the end of 2009.
IP is out. Down 0.2% in May after a 0.7% drop in April. That's 0.4% weaker than the median estimate. Factory output was flat despite a pick-up in vehicle output, after a 0.9% fall in April. IP peaked in January, factory output in July of last year.
The scale of the chart makes all the curves sharply Vee shaped. CR, do you anticipate that when the upturn comes it will follow past trends or do you see a U shaped recovery? Maybe an L shaped recovery? One day we will see the bottom. The question will be if there is so much pent up demand that starts take off like a rocket or explode on the launch pad.
No, CR, the inventory is NOT being worked off. At the best it is being transferred. Some is being transferred to rentals. For inventory to be worked off we need decline in Vacant Units, no?
I'm assuming these figures include custom homes. The builder already has a buyer who already has financing--or cold cash--on hand. I'm guessing that a lot of these homes will not have a For Sale sign on the lawn this year.
In our area, spec building has stopped cold, but many smaller custom contractors are still busy. A surprisingly-large percentage of new custom home construction for the upper income people involves cash sales. Countrywide not a party to the transaction.
Outsider writes:
Will the flooding in the mid-section of the country have any impact on construction numbers and home improvement chain earnings?
Outsider | 06.17.08 - 9:04 am | #
I seriously doubt it - I know some of the areas under water pretty well and there isn't a lot of new build anywhere near those rivers - they either pass through farm country or if through an urban setting are pretty industrial. Not the kind of places that advertise... 'On The Water!!!'
I think perhaps Outsider was wanting to know if there is enough destruction to trigger a "boom" in rebuilding and repairing, with money provided by the government and insurance companies...
I suspect the building materials places closest to the hard-hit areas will have a brisk third quarter, but I don't imagine it will be enough to move the needle nationally for Home Depot etc. I don't really know, though.
The picture on the news of the houses jammed together by the current against the bridge was amusingly horrific.
Chicago---pffffthttttt!!!
Here in much smaller Miami Dade, we
have many more condos coming on line.
Frankly except for a person who has commissioned their dream home and has the wherewithal, I fail to see why anybody is building anything. Except that builders gotta build--that's what they do. One of my clients is like that, and does not like suggestions that he should do something else--or simply relax around the house--for a while.
Why don't we go the whole enchilada, and push Iran into dropping a few nukes on South Florida? Nukes have almost as much destructive power, and the ensuing war would really juice demand.
Then the builders could build again, and not have to worry about bribing politicians so much.
dilbertdogbert:
I am that "pent up demand". And after reading this blog and waiting a year longer than I'd hoped, I decided not to buy a condo or townhouse (which I can now reasonably afford in a nice area at 2x earnings) and instead wait for the in-town SFR market to come to me. Let's give it another year.
"I am that "pent up demand". And after reading this blog and waiting a year longer than I'd hoped, I decided not to buy a condo or townhouse (which I can now reasonably afford in a nice area at 2x earnings) and instead wait for the in-town SFR market to come to me. Let's give it another year."
There are those who expect prices to temporarily undershoot a sustainable level while prospective buyers wait for the dust to clear so they can check that it's safe. Reasoning like yours is the reason that this may happen.
Not a criticism -- more power to you, and with the right timing you might pick up a heckuva deal.
Gosh, what are in those barrels? Any clue? Judging from how high they're floating, air. There may well be fairly toxic residue inside but they're obviously mostly empty.
I'd guess that they were stockpiled near the river bank for somebody's planed floating dock.
As long as there is anyone that thinks they can build their way out of the glut, there is more to come.
Natural catastrophes provided a much needed relief package to building trades a few times in the past. I'm thinking hurricane Andrew.
Also, both the Oakland fires and Northridge were lifelines. The Oakland fires were a real trend setter in that the builders were able, with the help of the CA legal climate, to charge huge premiums to rebuild to 'replacement cost' often 2 to 3 x insured values.
First!
Will the flooding in the mid-section of the country have any impact on construction numbers and home improvement chain earnings?
The trajectory in starts, single starts, permits and single permits is less steeply downward now than through much of last year. That is what one would expect, after the base has contracted so far. As a simple mathematical proposition, we ought to see a slower decline. NAHB data have stabilized at a dreadfully low level, but stabilized, none the less. That, too, may mean a slower pace of decline in construction. Still a drag on the economy, though.
Might want to look at the Windy City for cheap housing. According to the Chicago Tribune the other day, they are forecasting that 10,000 (that's right, 10,000) new condo units will come online by the end of 2009.
IP is out. Down 0.2% in May after a 0.7% drop in April. That's 0.4% weaker than the median estimate. Factory output was flat despite a pick-up in vehicle output, after a 0.9% fall in April. IP peaked in January, factory output in July of last year.
--
"Single-family housing completions in May were at a rate of 869,000"
Holy pig! Talk about adding to inventory because sales are lot lower.
To Hopebuilders -- rather than begging Congress, stop building, you morons!
How come morons and Crooks get to run companies and industries?
Houston, we got a fundamental problem in America that cannot be solved by periodic elections. Could it be that we got a BAD econo-political system?
Jas
The scale of the chart makes all the curves sharply Vee shaped. CR, do you anticipate that when the upturn comes it will follow past trends or do you see a U shaped recovery? Maybe an L shaped recovery? One day we will see the bottom. The question will be if there is so much pent up demand that starts take off like a rocket or explode on the launch pad.
--
SFH Completions:
2008:\tYear to Date\t443.7K
9 months worth of demand completed in 5 months.
No, CR, the inventory is NOT being worked off. At the best it is being transferred. Some is being transferred to rentals. For inventory to be worked off we need decline in Vacant Units, no?
Jas
SFH Completions:
2008: Year to Date 443.7K
9 months worth of demand completed in 5 months.
I'm assuming these figures include custom homes. The builder already has a buyer who already has financing--or cold cash--on hand. I'm guessing that a lot of these homes will not have a For Sale sign on the lawn this year.
In our area, spec building has stopped cold, but many smaller custom contractors are still busy. A surprisingly-large percentage of new custom home construction for the upper income people involves cash sales. Countrywide not a party to the transaction.
Outsider writes:
Will the flooding in the mid-section of the country have any impact on construction numbers and home improvement chain earnings?
Outsider | 06.17.08 - 9:04 am | #
I seriously doubt it - I know some of the areas under water pretty well and there isn't a lot of new build anywhere near those rivers - they either pass through farm country or if through an urban setting are pretty industrial. Not the kind of places that advertise... 'On The Water!!!'
Picture
Like that deposited in your front yard?
Dryfly--
I think perhaps Outsider was wanting to know if there is enough destruction to trigger a "boom" in rebuilding and repairing, with money provided by the government and insurance companies...
Enough destruction to trigger a boom? Frederic Bastiat says "no."
I suspect the building materials places closest to the hard-hit areas will have a brisk third quarter, but I don't imagine it will be enough to move the needle nationally for Home Depot etc. I don't really know, though.
Gosh, what are in those barrels? Any clue?
The picture on the news of the houses jammed together by the current against the bridge was amusingly horrific.
Chicago---pffffthttttt!!!
Here in much smaller Miami Dade, we
have many more condos coming on line.
Frankly except for a person who has commissioned their dream home and has the wherewithal, I fail to see why anybody is building anything. Except that builders gotta build--that's what they do. One of my clients is like that, and does not like suggestions that he should do something else--or simply relax around the house--for a while.
Also, there are several who have expressed the wish for a good hurricane. And these are people who endured Andrew.
Why don't we go the whole enchilada, and push Iran into dropping a few nukes on South Florida? Nukes have almost as much destructive power, and the ensuing war would really juice demand.
Then the builders could build again, and not have to worry about bribing politicians so much.
dilbertdogbert:
I am that "pent up demand". And after reading this blog and waiting a year longer than I'd hoped, I decided not to buy a condo or townhouse (which I can now reasonably afford in a nice area at 2x earnings) and instead wait for the in-town SFR market to come to me. Let's give it another year.
"Housing Starts: Lowest Since 1991": you lucky lads. The Telegraph this morning said that in Britain it's Lowest Since 1945!!
"I am that "pent up demand". And after reading this blog and waiting a year longer than I'd hoped, I decided not to buy a condo or townhouse (which I can now reasonably afford in a nice area at 2x earnings) and instead wait for the in-town SFR market to come to me. Let's give it another year."
There are those who expect prices to temporarily undershoot a sustainable level while prospective buyers wait for the dust to clear so they can check that it's safe. Reasoning like yours is the reason that this may happen.
Not a criticism -- more power to you, and with the right timing you might pick up a heckuva deal.
Gosh, what are in those barrels? Any clue? Judging from how high they're floating, air. There may well be fairly toxic residue inside but they're obviously mostly empty.
I'd guess that they were stockpiled near the river bank for somebody's planed floating dock.
This would be especially startling if you did it on a starts-per-capita basis. If you use that metric, we are back at '82 levels, I would guess.
As long as there is anyone that thinks they can build their way out of the glut, there is more to come.
Natural catastrophes provided a much needed relief package to building trades a few times in the past. I'm thinking hurricane Andrew.
Also, both the Oakland fires and Northridge were lifelines. The Oakland fires were a real trend setter in that the builders were able, with the help of the CA legal climate, to charge huge premiums to rebuild to 'replacement cost' often 2 to 3 x insured values.