Housing Starts in August: Moving Sideways
Submitted by
CalculatedRisk on Thu, 09/17/2009 - 5:56am (63 comments)
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According to Schiller, the recent housing boom was the highest level of construction ever, except for one year, 1951.
Schiller described 1951 as a special year because we were just starting war in Korea and people were afraid that housing construction would be shut down by the government like it was during WWII. So, everyone rushed to get into a house.
new normal
Keep 'em coming, boys! We need more houses!
Quick Pig.
and will probably stay near this level until the excess existing home inventory is reduced
And by reduced do we mean 2014?
2x
Still trying to work out the PPIP games for RCS. I guess they need an FDIC bank or gov't agency to refinance at 80%. Looks like a good deal for the shillbank ("Franklin 2.0"), especially a George Bailey trying to help the community stay in their homes. FDIC loses less than they thought because they make the same "gain" off their expected loss as RCS. Franklin 2.0 can borrow on good terms from JPM, guaranteed under TLGP. Maybe take out insurance from new and improved AIG...
RCS cashes out maybe $100 MM. Now they're growing. Their lender takes a piece of the bonus pie, too...
Whoa - slow down CR - two posts in less than two minutes - making me dizzy: see the slide deck at: Qatar's Largest Investment Bank Discusses American Monetary Diarrhea | zero hedge
We have about 20 ferrel pigs running around, within a half a mile of our property...
I saw them this morning on the road, pre-dawn. It was pretty much a daisy-chain, all walking quickly, all glommed together, young and old, small to big. (250 pounds).
They say of all animals we've domesticated, pigs can go back to the wild the easiest~
I've seen em' a number of times in this fashion...
I still think we have a good chance of taking out the January low next January. At lot of the increase we have seen is seasonality. And it will be hard for home builder to increase starts above completions unless they get new loans from the banks. Since the Federal Reserve will be leaning on banks to reduce their concentration of C&D loans, more likely the banks will want their lending to home builder to decrease.
Home builders, eternal optimists, may want to build more homes but the banks are no longer enablers.
Based on the housing credit numbers and incentive thresholds discussed earlier in the week, the simplest approach would be to multiply the number of houses in inventory (x) by the incentive payment at the margins for additional purchases ($43k per purchaser), and arrive at a one-time payout of stimulus to correct the overhang (y).
Anyone got the x number?
It's a cinch, problem solved move on.
C
Comrade Scott wrote in the last thread, "I can't see that this bodes well for household formation at all... "
You know, it may be that there's some large scale natural law operating for the benefit of the planet, if not humans. This society, this lifestyle, these humans have become unsustainable since the rest of the world aspires to the same lifestyle. We can't simply crowd out every other living species - we're the apex, we should be a smaller population. It may be that the difficulty in forming households, the increasing cost of sustaining offspring, the unpleasantly increasing complexity of every interaction (have ATMs made life simpler, or more complex .... not sure) - maybe it's a gentler way of our planet's telling us "enough." And birth control provides the technology. As opposed to wars, famine, pestilence, and death.
A few days ago CR referenced that article on redefining economic health and quality of life. A declining human population (although seemingly regarded with horror by the European states, for example), has all sorts of benefits for the planet.
We have about 20 ferrel pigs running around, within a half a mile of our property...
I smell breakfast.
Not a linear problem; the marginal incentive payment will depend on the size of the program. I'm guessing you'd find it pretty expensive to squeeze those last houses out of inventory.
Pigs are pretty nasty, other animals shy away from them...
I prefer my bacon in 1 pound increments~
They also love to tear up lawns. My unfortunate neighbor's patch looks like the aftermath of a world war 1 battlefield scene.
......do they have counseling and workshops for this?.........
Back to the quickly pigged unemployment report - another report with the prior week's figures adjusted up.
Yalt - you mean McMansions are sticky at the margin and the incentive might need to be higher than the average? Oh noes. There must be an algo for it. Maybe link the credit to meet downpayment as proportion of total number such that debt service never rises about 33% of monthly after-tax income? Maybe the credit would need to be in the high six figures, but hey, if it corrects the overhang, surely it's taxpayer money well spent?
Plenty of taxpayers too.
Huh? Only 140m workers supporting 300m people? Oh.
C
Root hog or die.
Saw a clip once of a jaguar chasing 4 little wild pigs.
Not a chance.
Ummm - bacon!
......feral pigs would be OK if you could eat them. Breed in a couple of pot-belly pigs into the mix and it's not very palatable. I guess it IS better than squirrel though.
. . . or, $43,000 per household = demise of QE/alphabet soup?
I'd consider that a bargain, and then get on with regulatory reform.
How many of those 140m workers are employed by federal, state, and local government?
I've heard pigs can turn feral within a couple of years.
How long does it take a homeless human to turn feral?
Jerry:
Don't sweat it, world ends 2012.
GS will finally have a loss, so it's worth it.
As soon as they hit a slope, one pig cut out and circled back, slamming the cat's hind legs and knocking him over in surprise. The 3 other pigs immediately turned and jumped down on him as well. They let him limp away dazed, probably a mortal wound.
REAL numbers you should look at:
Unemployment is out, yippee! It's better than last week! Historical perspective follows:
Comparison..... 2009..........2008..............2007.................2006
9/12/2009 ….... 407,869 ....… 382,249 ....… 261,971 ....… 240,231
YTD Totals … 21,694,379 … 13,595,828 … 11,614,509 … 11,291,964
Delta Prev. … 8,098,551 … 1,981,319 … 322,545 …
July Totals … 2,349,590 … 1,673,184 … 1,359,167 … 1,388,991
Aug Totals … 2,321,221 … 1,803,676 … 1,318,189 … 1,295,295
Sep Totals … 874,167 … 718,982 … 507,497 … 499,770
If we compare to earlier this year, "things are getting better" - if we compare to previous years and REMEMBER WORSE IS WORSE, things are NOT getting better. The descent continues. Also note September is always a lighter unemployment month as schools kick in their hiring and layoffs were completed in August. Companies start to prepare for "holiday" season". October numbers should really be interesting.
Note on continuing claims, the FEDERAL EXTENDED CLAIMS, 2,188,364 on June 11, 2009, is now 3,141,485.
So, the number of those not finding jobs after state money has run out has climbed 1,000,000 in 3 months.
And how many dropped off the federal rolls?
Thanks for the ZH link. Charts are scary familiar...
Eldest shocked me this weekend by saying that she's taking AP Econ in HS next year.
We stopped at Barnes and Nobel last night and came across Krugman's new book in which he claims that what's happening now is akin to the 1930s. Led to interesting discussion...
"No dear, it's not over yet."
She's pushing like crazy to earn as much as possible now - babysitting gigs, now reffing for youth soccer.
But she's a vegetarian, so she won't touch pig.
Kings County - Local ag interests say the sale of 14,000 acre feet of water by a Kings County farm might send the wrong message that agriculture is not hurting from a lack of water.
However, others point out the $77 million sale of what has become a precious commodity is just a sign of the times and a result of three years of below normal rainfall and decisions by the state and federal officials to cut water deliveries to farms and municipal districts.
The district is paying a whopping $5,500 per acre-foot, a price that farmers could never compete with, said Sarah Woolf, spokesperson for the Westlands Water District on the San Joaquin Valley's west side that has been hit hardest by the water crisis.
“Those kind of dollars are unbelievable. Ag will not be able to compete” with urban areas at those prices, she said
http://www.valleyvoicenewspaper.com/vv/stories/2009/vv_watersale_0215.htm
So, you are in the Farming-Industrial-Complex, and you decide that for the sake of an Amazing one-time payment, that you will forego any possibility of ever growing food again?
I'd bet you dollars to doughnuts that ever other FIC is thinking the same thing right now, "We're thinking of selling too".
That too, but really I was thinking that the pool of potential buyers is limited and the deeper you dig into it the more you'll have to spend to get them to buy (or even to make it possible).
GM failed with a 3 dependents to 1 worker. Road map to US failure?
Can someone explain structural unemployment and how Europe seems to be setting a bad example. My initial thought was that in the US long term unemployed people were bums on the street and in Europe they allowed them to stay in their homes and feed themselves. I know some countries have previous earnings related unemployment benefit but its usually capped and its never a career choice.
Gee, hardly seems like there's anything wrong with a stable level of new construction - I'm curious how this intersects with housing stock replacement rates and household formation. I think the employment numbers really suggest the latter will be taking a permanent (structural) nap.
good morning all.
ken i do love that thank you so much.
there are 417 guests online here @9:36am on a thursday. wonder how many of them are working for the gov?
pick a name people and join in.
i think the topic is pigs housing starts unemployment or something like that.
got
Offal men did awful things often.
@w10949 - my snark detector is not working this morning...frothing debate about "read the bill", the PATRIOT Act and then a flu shot...it's been a busy AM, and has thrown me off...
Structural UE will result in pressure for real Western European "Socialism" of the democratic socialist (vs. authoritarian) style...people will buy the "bums" line, until they see it applies to them or their family members...or, like fish, they decide that the family members who needed a bit of "temporary" help started to really stink after six months...
Game theory says you pay the chronically unemployed a dollar more in cheese and health care than what it would cost society if they instead formed roving gangs of starving germ carriers. You could also round up a minority scapegoat and exterminate them, but then wages would go up and house prices still fall. Or you hope you get lucky with a Van Gogh or a Hendrix, neither ever able to hold a steady job that paid the rent.
@Comrade Scott
You live in Charlottesville, right? I went there friday and noticed quite a few 'audit the fed' signs in the medians of 29 and 250.
You?
Error - washingtonpost.com
camp bucca is closed.
Reuters this morning:
"New U.S. housing starts and permits rose in August to their highest level in nine months and the number of people filing of unemployment benefits fell last week, evidence a solid economic recovery was underway."
CR you're such a DOOMER
How will the Iraqis eat like kings without the giant portions from Bucca Di Beppo?
Sotomayor Issues Challenge to a Century of Corporate Law
In her maiden Supreme Court appearance last week, Justice Sonia Sotomayor made a provocative comment that probed the foundations of corporate law....
Judges "created corporations as persons, gave birth to corporations as persons," she said. "There could be an argument made that that was the court's error to start with...[imbuing] a creature of state law with human characteristics."
Does America ever get over it's infatuation with money?
The UK* and we are the only countries around, whose money is still valid, from the very first time banknotes were issued. You could take a 1861 Greenback $10 banknote and buy a 6-pack of beer with it today, it's legal tender.
Most every country in Europe has gone through many periods where the money was worth nothing and the people had to start over from scratch, a humbling experience.
Yalt - the pool of potential buyers would surely increase depending on the incentive?
Anyhow, I wasn't trying to make it work, just pointing out the reductio of a stupid policy.
C
question y'all
since 2000 has there been a solid economic recovery in the usa?
Please tell me Thomas or Scalia had a panic attack.
dow 10K today?
All,
You've got to see this. Ken Fisher in rare form:
Too Much Debt Please. We Need MORE Debt Says Ken Fisher: Tech Ticker, Yahoo! Finance
We're under-indebted! Who Knew? It really makes me what all the foreclosures and fed money printing are all about.
Philly Fed:
Prices paid 14.9 vs. 10.0 last month
Prices received -10.6 vs. -1.5 last month
The squeeze is on.
Hi, did you all see what Barclys did with their toxic sludge? Shipped it to Cayman, apparently. Can all the US banks do this too? And if so, what happens to it when it has to be written off? Why didn't Goldman think of this before Barclays?
Barclays creates $12bn credit vehicle By Sam Jones (FT)
Barclays has unveiled a plan to sell more than $12bn of risky credit assets to a company it has created to try to reduce the risk of further writedowns.
Protium Finance, a partnership of so-far undisclosed investors , will buy the securities using a $12.6bn loan extended by the bank. Protium will be managed by Stephen King, the head of mortgage trading at Barclays, and Michael Keeley, a member of the Barclay’s Capital management committee.
The assets include $8.2bn of structured credit securities insured by monolines, $2.3bn of residential mortgage-backed bonds and $1.8bn of unpackaged mortgages.
Moody’s rating agency only on Tuesday forecast £130bn of further losses at UK banks as a result of underperforming credit instruments and loans.
Barclays’ structured finance portfolio has long been the subject of speculation. Several banking analysts in the UK have predicted a further deterioration in the portfolio’s value that could drag on Barclays’ profitability.
Analysts say in particular Barclays was exposed to the risk of a further deterioration in the value of so-called monoline insurance.
Barclays has already reported various writedowns since the onset of the financial crisis because of downgrades to monoline insurers’ credit ratings, but the bank’s valuations remain higher than those of similar assets owned by its peers.
Barclays will still be exposed to the assets through its loan to Protium, but the transaction will remove some of the mark-to-market risks the bank faces, and could minimise the chance of further writedowns.
Protium has been backed by a $450m investment from its partners. The partners will receive 7 per cent a year on their investment as well as any excess returns from the assets’ performance.
The transaction should prove lucrative for Mr King and Mr Keeley. Under the terms of the sale a fund management company called C12, whose principals are Mr King and Mr Keely, will be paid a management fee to run the fund.
Chris Lucas, Barclays finance director, said: “We are not seeking through the transaction to effect a change to our underlying credit risk profile, but we are restructuring a significant tranche of credit market exposures in a way that we expect will secure more stable risk-adjusted returns for shareholders over time”.
OT but geopolitically significant, even from an economic point of view:
"September 17, 2009
Czech President Jan Fischer confirmed that U.S. President Barack Obama notified him that the United States will abandon plans to develop a missile defense system in Poland and the Czech Republic, the BBC reported Sept. 17."
It seems, for one, thing, that the price of gas at the pump should remain relatively stable, ATBE.
I am generally surprised at how much economic data has come in better than expected, but as David Rosenberg pointed out in his morning report today, it is difficult to evaluate the current state of the patient when so much medication has been given to him. This helps support my view that for even for investors who feel comfortable shorting the markets, it will be difficult to be profitable doing so because of all the govt intervention and rule changes, such as the CRE tax changes that sprung up the other day. Instead, I think a safer alternative is to invest in gold related assets, given the Fed's clear intentions of pulling out all the stops to try to prevent deflation. i recently read a good article discussing these items at Monetary base expansion may boost gold price. that I think is useful for people to read. The easy money policies and money printing bring with them severe long term consequences for the future of our country, and for the global economy. All of the currency debasement has the potential to lead to big inflationary problems down the road.
Squeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeze.
Pavel,
What is your take on this?
Is it both Russia & us saying whoa, that costs a lot of money... or just us?
jturner - you've made some sterling efforts in the last week, but it still looks like
to me.
The great majority of investment advice on this board is tongue in cheek, at the very least.
But FAZ is a screaming buy. I'll permit myself that.
C
Speaking of economic policy, it is quite unclear who is running what in Washington. Larry Summers, who wears his ego on his waistline, earned himself a long stay in the doghouse by talking down to the President at a number of late-night sessions. Timothy Geithner’s impression of Stan Laurel continues and persuades no-one. For all intents and purposes, Ben Bernanke is running American economic policy, but his board is more split than a Fed board has been since the 1980s. American economic policy is the most incalculable thing of all.
No-one wants the United States to disappear from the scene: No-one wants to shoulder the burden of being the world’s policeman-cum-mediator, of providing a global reserve currency, of sending aircraft carriers to put the bad guys in their place. An Australian politician with a longstanding interest in foreign policy was seated next to me at a Melbourne dinner a couple of weeks ago, complaining bitterly that Australia would have to start spending huge amounts on defense to replace the lost presence of the US.
No-one wants to see the US go, but everyone is busy making alternative arrangements. It reminds me of the end, rather than the beginning, of the Carter administration. It’s going to be a long, long three years.
Inner Workings » Blog Archive » Japan: We Don’t Want to Exclude the US, But…
Cnn stated yesterday 59% of the Adult US Population are not employed. There is several segments of the population I can count, such as those drawing SS(don't work as VP Biden is drawing his) Those on disability(don't work(grey market), and those incarsarated. Wonder where they got their figures????
"Pavel,
What is your take on this?
Is it both Russia & us saying whoa, that costs a lot of money... or just us?"
JD, I don't know how much my take is worth. I sense that there are issues and facts to which the public, of which I am one, are unaware. On a more visible level, Iran has probably lost in Russia a potentially dependable patron. The global public has, therefor, been relieved of its anxiety over possible blockage or constriction of the Persian Gulf. The US may possibly have gained further Russian cooperation in Afghanistan. Arms control can proceed on track. Russia needs arms control even more than the US, and has less to worry about now in a strategic sense. I don't know how this will affect Ukraine and Georgia, but Russia's sphere of influence in the 'former' seems a bit more secure.
But again, there should be other factors.
Heya Black Dog - yes I do...
'of which the public'
Counterpoint and jturner: Heres some hope for your FAZ
Tilson: Enjoy The Housing Head-Fake While It Lasts
Whitney Tilson of T2 Partners is sticking to his guns on housing: The uptick in recent months is a seasonal mix issue...
When the market finally sees this, Whitney says, banks and homebuilders will tank...
There's a cool (but long) slide show too - see the srib'd attachment.
Tilson: Enjoy The Housing Head-Fake While It Lasts
Check out National Association of Realtors youtube "call to action" to Congress lobbying for extension of the $8000 tax credit.
YouTube - NAR Call for Action
The NAR president says we'll see in the video how the credit is "making a real difference in the lives of families." It then goes on to show who those families are: those of Realtors.
Realtors suck