Housing Starts: Is this the Bottom?
Submitted by
CalculatedRisk on Tue, 03/17/2009 - 1:25pm (92 comments)
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Stock market is only just starting to price in the inevitable second-half recovery.
o snark. For reals.
7-8 more months. I am noticing more awareness by the consumer much more lately in Charleston, SC. Check out my just launched Real Estate Blog "ESTATE". ESTATE
only 3 month away from second half recovery!
When should renters jump in and buy?
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/4519625293362105918
Is anybody else surprised that no major homebuilders have declared bankruptcy?
--
Because we are far from the bottom in terms of date.
Jas
William Lyon's says we've hit bottom:
William Lyon Homes' Southern California Divisions Report 39 New Homes Sold in Just Three Weeks Indicating A Possible Turn in the Tide
The Coyote wipes his brow having successfully pushed the anvil above his head rather than risk landing on it at the bottom of the canyon.
CR the obvious anger any call of bottom will get notwithstanding - props to you for having the guts to call it!
My personal opinion is that an "existing home" is a better value than new construction. Too often, I have seen those oriented-strand-board McMansions exposed to the weather during contruction. As the economy declines, I think that buyer's will be seeking value rather than newness.
The scam artists are still out there peddling mortgages to suckers so they should cut that inventory pretty quick. I'm working on refinancing now, I just got a mortgage packet in the mail. I owe 129K, for some reason they list the amount that I'm borrowing as 176K, they lied about the income and they lied about the rate they would give me. The payment is what they said it would be which is the same as I'm paying now. I wonder who is getting the other 40K I'm borrowing but not getting? BWAHAHAHA...I think I'll pass.
No, there is too much inventory for it to be profitable building new homes.
There is still a load of incumbent workers trying to make a go of the only thing they know. They will have to both find jobs in different industries, and shift towards renovations away from building within the industry.
The question should become how reliable will these surveys be as the industry realigns itself.
Everything's fine today, that is our illusion.
Voltaire
If the bottom is in, I shall stop my feeble attempts to foment a revolution.
I saw a bottom the other night, it was beautiful but seemed to move further away the more I watched....
thread music
YouTube - Queen - 'Fat Bottomed Girls'
The Latest from Ritholz:
Fusion in L.A., Beverly Hills
Even if this were the bottom, there is nothing to to say we're going to start back up anytime soon (and lots that says we won't).
"Housing starts. How to live on borrowed time." published by NAHB
Don't forget the borrowed money. Borrowed money is more important than borrowed time.
Sure, everything looks like it's going up.
But how much is this just a bully-pulpit "up."
There has been a concerted effort on the part of the administration
to talk-up the economy in recent days. How will the markets weather
"earnings," and the dismal outlooks that many companies will offer?
I think key is when we do bottom, what will the other side look like? I say a Japanese style economy for 3-5 years with -1 to +1 GDP and UE hanging around 7-10% for the entire time.
China is secretly dumping dollars
Asia Times Online :: China News, China Business News, Taiwan and Hong Kong
News and Business.
Or are they not so secretly overpaying for "hard" assets?
It's Rockfeller Center all over again.
Goldman Sachs lends money to its cash-strapped executives
Graeme Wearden
guardian.co.uk,
Tuesday 17 March 2009 10.00 GMT
Goldman Sachs lends money to its cash-strapped executives |
Business |
guardian.co.uk
"One former Goldman partner told the New York Times that a significant number of the bank's partners are now worth less than $5m (£3.6m) each, despite having enjoyed years of multimillion dollar bonuses."
"Goldman was forced to give up its treasured investment-bank status last year, so that it could receive emergency funds from the Federal Reserve."
AIG
Absence In Guaranty
Action In Guile
Accessory In Guilt
CNBC TV may still be the land of idiots, but their web-site is looking like a doom and gloom glog:<br/><br/> Whitney: Banking Woes Likely to Get Worse in 2009 - CNBC "A surge in borrower defaults and unemployment pressures will make 2009 an even uglier year for banks than last year, analyst Meredith Whitney said."<br/><br/> Treasurys Are 'Disaster Waiting to Happen': Dr. Doom - CNBC Treasuries are "a disaster in the making" says Marc Faber.
EHP: Oh, yeah. Dr. Pangloss.
I should have read CR's post first, but I just wanted to post a Voltaire quote. He is a good tangential relation to financial crisis and public dissatisfaction
The ranks of the unemployed are still swelling -- many haven't even gotten laid off yet (due to federal requirements of advance notice) and most haven't run out of their unemployment benefits. Most state & local government layoffs haven't kicked in yet, either.
Combine this "second wave" of foreclosures and/or forced sales along with those pending recasts and you have the makings for another leg down.
Finding this bottom won't just require two hands and a flashlight; it'll require a backhoe.
the hits just keep coming on AIG
AIG Consumer Lender, Plane Unit Downgraded by Moody’s (Update3) - Bloomberg.com
c&c,
Why only 5? We're in much worse shape than they were, and they're still stuck there nearly 2 decades later.
For all you doomsayers: The Japanese market is up! Up!
Nearly 1000 pts in just a few days!
Any bottom in housing prices will not be in 2009, that is a guarantee
New construction is happening in some shore areas in NJ, not so much in the major urban areas.
New construction cycle could become very localized and go after discounted full cash sales.
TJ- because america is like allstate, your in good hands..
Is anybody else surprised that no major homebuilders have declared bankruptcy?<br/><br/>No, they're getting nice tax refunds since they were allowed to carry current losses back over 5 years of profits.
We'll know the bottom is in when Summers and Geithner hold a joint press conference with Greenspan in attendance warning against irrational exuberance.
I'm fascinated that we're talking about a residential real estate bottom in part because of February data.
I think Geithner or Summers will be gone in 2009
Looks Like John Paulson likes gold ...http://www.businessinsider.com/john-paulson-goes-long-gold-2009-3
Thank You, John Paulson. I just wish I had bought more AU back in November. Nice double there.
How many of Boomer America losing their 401K money will need to sell and down size. Even if housing bottoms there will be a lot of musical chairs and foreclosures to deal with before building makes a dent in growth. I say several years before any significant building comes back.
reptillian writes: Sure, everything looks like it's going up.
But how much is this just a bully-pulpit "up."
There has been a concerted effort on the part of the administration
to talk-up the economy in recent days. How will the markets weather
"earnings," and the dismal outlooks that many companies will offer?
\t
Don't be a doomkopf. We have built a cusion for the inevitable decline that will come. Wait. You'll see. You may now bow dwon and gaze upon my jewel studded shoes.
c&c,
Are homes in Bakersfield free yet? That'd be a sign of a bottom.
--
No, when banks pay you money to get a house off their balance sheet. They will have auctions as to who will be willing to take the least money to get a house.
Jas
surely this is the best of all possible worlds
With property taxes to go higher in major cities, to help plug deficits, a new dynamic will appear for urban new construction vs. suburban new smaller construction.
Old models might be due for a revision.
--
On the subject of housing bottom CR has become a good contrary indicator. We can be certain that the housing in the US will not bottom in 2009. There could be a short-term bump in activity but nothing sustainable. We are facing a deflationary depression and CR doesn't know what that animal is.
Jas
--
BTW, last year CR predicted the units bottom, e.g., SFH Sales will bottom at 600K. Now, he has adapted another tactic -- call the calendar bottom -- to get the second chance to be right in calling the housing bottom. His third chance would be to call a price bottom.
Jas
With all that pre-election talk of "change," I am shocked -- Shocked! -- that Obama didn't tell those mofos on Wall St. that they've got to take their losses.
Bernanke's in a deep hole. He can tell the market the Fed is going to buy treasuries and kill the stock market rally dead in its tracks as money floods into treasuries or ignore the treasury purchase issue and start a treasuries selloff.
Methinks he wants treasuries to get goosed so the equities market takes a beating...
--
"Bernanke's in a deep hole."
You mean he is hiding in a rat-hole like Saddam? With his beard and all. Evildoers both.
Jas
Why would he want equities to drop?
I am not a real estateist!
ATTENTION ALL BOTTOM CALLERS
Has the Market Found a Bottom? - BusinessWeek
--
David Rosenberg:
"Are we enduring another bear market rally? -- It sure looks that way – on average, they have lasted 26 days and have seen the S&P 500 jump 13%. One did last 70 days and one did manage to see the market advance 24%. The major reason why we believe this is the seventh bear market rally instead of the nirvana start to a whole new bull market is the pattern we can see in sector performance, because each one of these flashy bear market rallies was led by the financials, followed by consumer discretionary and then materials. It’s been no different this time around, in the same order. The worst three sectors, health care, staples, and utilities, have remained the laggards during this short-covering rally, as they did in the other six."
Just a little extra info that supports your thoughts on new home sales:
I've been tracking the 12-mo. SA rolling inventory of EXISTING homes for sale. It has been at 10.4 mos. since last October, except for a mini-spike to 10.5 in November. It had been moving upward until that time for more than two years.
Maybe it's an inflection point in EHS as well. Still, more homes could come on the market this spring to upset the inflection point, and prices have to fall a lot further before the inventory returns to a more normal 4-6 mos. Because of all the issues in mortgage refinancing and foreclosure, I don't think that will happen for at least two more years.
Still, it may be a start.
Comments....get your free comments here!
guardian.uk.com
Barclays gags Guardian over taxInjunction forces news website to remove seven leaked memos showing how bank avoided hundreds of millions of pounds in tax
Comments (139) Staff reporter guardian.co.uk,
Tuesday 17 March 2009 09.05 GMT
Barclays gags Guardian over tax |
Business |
guardian.co.uk
NJ cites thirst for profit and greed in suit over Lehman losses>
Cr is stating that 2009 may be the bottom in starts,not prices.Since much of the construction in this boom was in places that have no sustainable demand and was of such poor quality there may be more new construction than would otherwise be expected.Soggy OSB was the least of it.
If there is one thing that all can agree upon, it should be this:
No more Mr/Ms nice guy. Move your deposits out of TARPed banks; find an insurer that isn't TARPed.
Sorry about the spelling and punctuation. I've been up since 4AM (and can't spell anyway...)
Dradis contact! Jain fleet. Emergency jump in 3 ... 2 ... 1 ...
Citigroup chief economist Lewis Alexander to become counselor to Treasury
Yahoo! 404 - Page Not Found
As a Wall Street insider from a bank that has been one of the largest recipients of government rescue funds, Alexander's appointment could raise some eyebrows. In December 2007, he was quoted as saying that while he believed the housing market would remain weak well into 2008, it was more likely that the economy would keep growing than head into recession, adding that the housing bubble was "correcting on its own."
No more Mr/Ms nice guy.
Agreed. Be careful, very careful
AIG
Accommadation In Gluttony
From the China article Scrooge posted:
But if China has indeed prudently and deliberately structured its official reserves (now totaling $1.95 trillion) to be much less exposed to the dollar than is assumed in the West, while off-loading the riskier, dollar-denominated assets into its secret reserves, how might it propose to use those secret reserves to further decrease its exposure to the dollar?
Funny, I posted this earlier on CR but if you look back at the thread it was posted on, it is now mysteriously gone. I've noticed some of my comments disappearing sometimes, I wounder why that is.
"I'm announcing here on CR for the firs time;
The "Save to Save America" Campaign.
Uncle Sam wants you to start saving money now, to help Save America. My new bumper sticker; Save to Save America! Will be free to anyone who requests one, while supplies last.
You Can help Save America by participating in this campaign locally. Just have these bumper stickers printed up with the slogan; "Save to Save America", and distribute them free of charge if you have the means. Thank You."
Also I got this response from ac, but that comment is mysteriously gone as well,
"Sorry, but you're not allowed to save - that takes too much power away from the government/politicians and puts it back in the hands of the people.
Remember, the purpose of the financial system is to get Obama re-elected, not to give you control over your future."
Senator Barack Obama received a $101,332 bonus from American International Group in the form of political contributions according to Opensecrets.org. The two biggest Congressional recipients of bonuses from the A.I.G. are - Senators Chris Dodd and Senator Barack Obama.
OpenSecrets.org: Money in Politics -- See Who's Giving & Who's Getting
Now just be a couple of good little Ho's and shut the hell up.
Jas, do you think that Americans are "born and bred dopes" because they do not revolt?
jokuhl on March 17, 2009 - 7:38pm
FIRST WOMAN
Will you ask Rick if he'll have a
drink with us?
CARL
Madame, he never drinks with
customers. Never. I have never seen
him.
SECOND WOMAN
(disappointedly)
What makes saloon-keepers so snobbish?
MAN
(to Carl)
Perhaps if you told him I ran the
second largest banking house in
Amsterdam.
CARL
The second largest? That wouldn't
impress Rick. The leading banker in
Amsterdam is now the pastry chef in
our kitchen.
MAN
We have something to look forward
to.
CARL
And his father is the bell boy.
-Casablanca, 1942 Julius J. Epstein, Philip G. Epstein and Howard Koch
Breaking on Reuters:
"Geithner says Treasury to require AIG to repay Treasury for bonuses just paid out of operations 8:49pm EDT"
So I gather there will not be a special excise tax on the employees?
Also I got this response from ac, but that comment is mysteriously gone as well,
"Sorry, but you're not allowed to save - that takes too much power away from the government/politicians and puts it back in the hands of the people.
Remember, the purpose of the financial system is to get Obama re-elected, not to give you control over your future."
It still shows up in my comment history, but I've noticed a lot of comments disappearing too.
BTW "Saving to Save America" is considered "Hoover Economics".
What we need to do is spend our way to prosperity - like the Soviet Union did with the war in Afghanistan.
Wait a second...
Yeah, I had to get your original quote from your comment history for proof.
I wrote a similar analysis to CR's a few weeks ago. Here's the link:
Why New Home Sales' Cliff-SPLAT! is not bad news | The Economic Populist
NAR's new home sales have fallen ~300,000 a year since the top at the beginning of 2006. If they continue to fall at that rate this year, they'll hit zero in about 12 months! Under those circumstances, there almost has to be a bottom - or very close to it - at some point this year.
I wouild point out that in past consumer-driven recessions YoY CPI almost always bottoms at the end of the recession. Unless people think OPEC will be giving away Oil by the end of this year, that also almost has to bottom by about 3Q 2009 sometime.
I really don't see how this post could be construed as CR calling a bottom.
His naturally optimistic tone is part of his style.
I'm sure people thought that they had reached the bottom of the "recession" in 1930.
We are no where near the bottom yet.
No, there is too much inventory for it to be profitable building new homes.
There is still a load of incumbent workers trying to make a go of the only thing they know. They will have to both find jobs in different industries, and shift towards renovations away from building within the industry.
That is exactly my view. There are simply too many people that cannot let go of the "tried and true" thinking that real estate is always a good investment. Too many people with careers and incomes dependent on building and real estate.
Here in Washington State there are ads by the side of the road that promise to build a brand new 1,500 sq foot home for $60,000. Desperation at work.
Re: Reuters
No sign of the story anymore. Sorry.
Well, not entirely sorry: I thought the whole "let AIG put the bonuses on their tab" plan was pretty asinine.
"Here in Washington State there are ads by the side of the road that promise to build a brand new 1,500 sq foot home for $60,000. Desperation at work."
I remember such signs in the Inland Empire, about 2004, saying,
"will build stick house for low cost." The doom is coming to Seattle.
US Treasury's Geithner: AIG must pay back bonuses
| Reuters
here it is
Re: AIG pay back $165m in bonuses. That's like requiring someone to pay you $1 for every $181 that they give you.
On a lighter note, Mr. Magoo's creator has died at 92:
<a href="http://news.yahoo.com/s/ap/obit_millard_kaufman>Mr. Magoo's creator dies
Bottom? It better not be the freakin bottom! Someone forgot to tell No.VA. cause we ain't rolled back to 2003 yet. I don't want to hear the word!!!!!!!!!!!!!!
"Geithner says Treasury to require AIG to repay Treasury for bonuses just paid out of operations 8:49pm EDT"
Completely missing the point. The issue is not repayment to the treasury, the issue is that charlatans should not be profiting from driving AIG into the ground.
Calling bottoms when (necessarily non-negative) numbers approach 0 is a bit academic, isn't it?
I mean, you can hook a corpse up to an EKG and get a nonzero reading if the noise level is high enough.
Stocks always climb a wall of worry. I feel for those who aren't long. :'(
Jas,
You mutant, freaking deaf mime retard, from a stinking So. Cal. sh!t pit. Don't trot out your tired ass, whiny, saggy underwear, I told you so rant again, or I am coming through the pipes to your IP address, and I am going to grab you by the hairs that grow so disgustingly out of your ears and give you a good shaking!
New Thread: Housing: Two Bottoms
http://www.calculatedriskblog.com/2009/03/housing-two-bottoms.html ( 0 comments ...You could be FIRST! )
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CRbot: Like the terminator, I'm back. Again.
Nova you dope, Jas is like the blob. You attack and it just gets bigger. >:o
Can I haz some some Barclays dokuments
on teh interweb?