Housing Starts Plunge, Near A 10-year Low

[Purveyor]

Pace of building new homes down 37.8% on year-over-year basis

MarketWatch
Last Update: 10:14 AM ET Feb 16, 2007


WASHINGTON (MarketWatch) -- U.S. home builders started the fewest homes in nearly a decade last month, as housing starts plunged 14.3% to a seasonally adjusted annual rate of 1.408 million, the Commerce Department reported Friday.

January's rate was the lowest for housing starts since August 1997. Starts were down 37.8% compared with January 2006, the largest year-over-year decline since early 1991.

Also, building permits dropped 2.8% to 1.568 million in January, 28.6% below the same month a year ago. Read the full government report.

The starts figure was much lower than expected on Wall Street, where economists were looking for a 2% drop to 1.60 million annualized units. The permits figure was close to the median forecast of 1.58 million expected in a MarketWatch survey of economists. See Economic Calendar.

http://www.marketwatch.com/news/story/economic-report-us-housing-starts/story.aspx?guid=%7BD838E2AD-17F0-4979-86A9-2CCA876CF8FE%7D

[Little Wing]

1. Thank the gods! There's hardly any forest left where I am

everything's been wiped out in order to put up shitty big cookie cutter mcmansions :puke:

[Gregorian]

13. OMG. That's almost the exact post I was ready to write.

Bravo! You're not alone. And here I thought I was about the only person alive who thought like that. What a great feeling. Speaking of which, I just rode my bike through redwoods. 22 miles of lovely muddy forest.

[Dover]

17. Me too. Said a little prayer as I passed the beautiful hills just west of Austin

the other day. There was one huge, beautiful ranch that had not been touched along one highway. But alas, I saw signs that it may have been sold and is being prepared for more McMansion Ranchettes. After being overwhelmed by grief I just simply prayed that SOMEHTING would stop this insanity! It's ironic that people move to these areas to SEE those beautiful hills, but end up perched on them in their city McMansions looking out over a sea of McMansion rooftops. What ARE they thinking? Why don't they just live in a city neighborhood?

Central Texas shows no signs, as far as I can see, of slowing down on this insane growth anytime soon. It will take a tsunami in the housing market and general economy of this area to slow it down.

Terrible to hope for misfortune in order to stop it. So my prayers go to those pushing for smart, environmentally sensitive growth.
Why not just build more smartly and put limits on developers? Austin is famous for these ongoing battles between development and slow, smart and ecological growth-concerned groups, being such an attractive location to many.

[girl gone mad]

14. No kidding.

I moved out of the suburbs to get away from the cookie cutter big box stuff. Two years later I'm back in the middle of a suburub again.

We finally elected a mayor who is opposed to the growth for growth's sake philosophy, but it's a constant battle since the council feels we should do whatever we can to get Wal-Mart and KB homes to build will nilly. Frankly, I'd rather have a trailer park than another tract home community.

The deer have been forced to a smaller range and I catch them grazing in my yard all the time now. The eagles and owls are skinny, but the vultures have moved in and they're getting fat. The coyotes seem to be doing better than ever.

[dapper]

19. Thank You!

I am going to hug a local tree for you!

When I moved into my new subdivision last year, across the road there were tons of trees and beyond that, a river. Much to my dismay, they tore out half the trees and now are building another subdivision. They can't even sell the lots in my subdivision!!! My house was build on farm land, no trees harmed...err, except to build my house.

As I drive around the general area, there are other trees coming down to make room for subdivisions. in the past 6 months the market has been extremely slow and it makes me wonder why they even take down the trees.

I visited a new "Nature Preserve" this past fall only to see that they have been taking down some of the trees... a nature preserve removing trees??? From what I understand, they only want plants and trees that are native to the area...

HELLO?!?!?!

Atleast I planted a tree last Arbor day :-)

Dapper

[w4rma]

2. Good. Prices should follow. (nt)

[Purveyor]

3. A record decrease in prices was reported earlier in the week.. n/t

Banks/mortgage companies holding notes are starting to mildly freak over the properties they financed that now have 'negative equity'.

Remember the Savings & Loan debacle of the '80s where people just turned in the keys to the bank and said "here, its all yours"?

[superconnected]

16. I want to buy, so I sure hope so.

They've been waaay to expensive the last decade.

[ozone_man]

18. Prices in much more than housing too.

GDP is 80% consumer spending and so much of that was fueled by home equity loans. Now that the home equity is about to go up in a poof of smoke, the economy will tank.

[Doondoo]

4. This should be interesting to watch over the long haul

[LibDemAlways]

5. The past couple of years there hasn't been a new

home built in my area with a pricetag under a million. No wonder construction starts have slowed.

[youngdem]

6. As someone who is in the real estate biz, let me tell you this is just the beginning

When you look at the root causes of home affordability, they are ALL heading the wrong way.

Wages aren't keeping up with inflation in general, and especially in housing. Energy prices are going up. Construction costs are going absolutely batshit crazy (some of our trade costs have more than doubled since Katrina). Insurance is going crazy. Property taxes are always going up because of the Bush tax cuts passing the cost of governing to the locals, who get much of their revenue from property tax. And interest rates are a little bit higher than their low.

This locks out new buyers. Not enough money, and the price and continuing costs are too much.

Then there are current homeowners of a recent purchase. All these people are trapped in their homes because the cost of selling the house plus what they owe exceeds total value. They are under water.
They won't be moving without a foreclosure.

Spec houses continue to be built, exacerbating the problem. (Though specs are coming to a screeching halt).

Then, there is the specter of Bush again attempting to get rid of the mortgage deduction. Poof! Another 10-15% of housing purchases will disappear, and the foreclosure rate would likely more than triple inside of three years.

The housing market in the US is about to crash in a way that will remind many of the 80's. Sadly, since new lending rules allow low or no money down, many people don't have the cushion to stave off foreclosure if a value drop or above factor comes into play.

[fed-up]

8. and how many realtors encouraged people to buy above what they could afford?

and how many realtors are responsible for the escalation in housing costs, by encouraging people to list homes at ever increasing prices-

and by realtors "investing" in homes and controlling a huge portion of the market-including having homes for sale at excaggerated prices to then encourage others to list their house at same unrealistic high rate

yes, some people did buy at those high rates, they needed a home and had no choice

once again realtors with the market crashing they will swoop in and pick up the pieces-that is after they are done counting all the profits they already made in the last few years

in our area with 500-600 homes on the market there are over 500 realtors, each ready to buy a house direct from a seller at a low ball figure-and scoop up the best deals around before true HOMEOWNERS get a chance to buy

I hope all those investors and investor realtors lose their shirts big time with the housing crash


end of rant

luckily I had bought my first home 20 years ago-and sold last fall before our local market totally tanked, and yes, when I downsized I found one for sale by owner and bought it without a realtor

this rant is not directed at you, but at those in the trade that have sooooo skewed the market

[Porcupine]

10. Not to mention the rental market house flippers......

There have been more than a few people with above average incomes purcasing homes, renting them at a loss, and flipping them in 2-5 years when the equity goes up. Because they were never expecting to have to float the entire cash flow on the property in the first place price wasn't such a large issue for them.

Of course now there are thousands of properties that can't show equity growth or positive cash flow. As the people who've trapped themselves in the rental market cut their losses there will be a fire sale on the housing market. It's all an artifact of GOP policies of wage destruction on the low end of the economy and tax holidays for the rich.

No pity from me.

[youngdem]

12. Tons...Car salesmen, lenders, grocers, they are all salesmen

It is up to the individual to decide what they can afford.

Besides, blaming this crisis on Realtors is silly. They didn't do it. They did their jobs...selling houses. The market has changed.

Your story about spec houses being scooped up by Realtors before they could be bought at higher prices by individuals is likely a misunderstanding of fact on your part. NO builder in their right mind would ever do such a thing, because he could sell it for more to an individual. Sure, there are speculative buyers in any hot market (of any product) and their arrival should signal to any person paying attention that the market is overheated. They don't intend to occupy the homes, and most don't do significant improvements, so they are counting on a rapid market price increase to grant them a profit on a spec flip. Problem now is that prices are NOT moving higher, so there is no spec incentive, so the 40% of homes that were second home purchases or spec/investment purchases are homes with no occupants, and will soon see the sheriff's sale.

Mark my words, the worst is well ahead of us. The conditions that led to this crisis are only deepening. Insurance, tax and cost of energy and construction will continue to get worse.

Good time to rent, folks. The bottom is three years away. (My guess).

[truedelphi]

15. Excellent points. I have watched in amazement as the

*Hotter* the market got - the more likely friends who were renters were spending weekends looking to buy a home.

"Gotta do it now before prices go even higher!" was one thing I heard.

"Wait till prices drop" says I

"Oh no our realtor says if prices ever drop, interest rates will be sky high and we will be locked out then"

I tried explaining how as the real estate market deflates, sellers then will come in and start to help the buyers finance, at below typical lending industry rates, but was laughed away.

[dapper]

21. I heard that too....

When we were selling my parents house (not my house in previous post), we had an offer come in that was in line to what we were looking for. My sister and I argued and I told her that we should take the offer as the housing market is not going to keep going up and I had a feeling prices were set to come down. My brother-in-law scoffed and told me the housing market will never go down... and he deals with Investments! He should know better than anyone about "markets"

It's okay, we had the house on the market for $420k and my sister expected to get a 500k offer for the house. I asked her why anyone would buy it for 500k when we were asking $420k??


Dapper

[truthisfreedom]

7. This is the death knell for rethug control of Congress.

We should have the Senate wrapped up by 2008.

[RaleighNCDUer]

9. I hope this means an increase in sales of existing homes --

my mother has been trying to sell her house since she moved to a retirement home 8 months ago, and only had three nibbles - it's a beautiful 50s ranch on 1 1/2 acres, in excellent condition, but people don't seem to care for the classic 50s kitchen. Realtors told her she could get 150K; I'm thinking more like 125K. She's counting on that money fo afford the retirement home.

[samplegirl]

11. Rush reports this a just a bump in the road

Ladies & gentleman. Clinton recession.

[dapper]

20. Glad I sold.... and purchased...

Before we purchased our house in NY, I told my wife we could live anywhere, it was cheaper outside NY State and I would have picked up and left in an instant. My wife wanted to stay in NY. I believe we purchased our house for around 250,000k but it was a handy man special.

After a few years our taxes went up to 10k per year, we could hardly afford it any more. Then they raised school taxes again! My wife had gone to help her sister out with her newborn baby in the midwest and brought home some Real Estate magazines. She was amazed at how inexpensive new houses cost (125k-200k). Our 250k house was now worth $400k, we could sell the house, pay off the mortgage and buy a house outright in the midwest. In a week, we had our house on the market.

I could not understand how houses could appreciate as much as it did in the time we were in the house (less that 5 years) and taxes went up about 3,000 per year. No wonder the housing market is going down hill.

We purchased a brand new house in the Midwest for $179,000 (bigger than our old home)... coincidentally, similar houses are now going for 200-225k?!?!??! In a freeeking year?!?! The builder has only build 2 houses since the summer. There is a brand new subdivision next to us and another brand new subdivision across from us... there is plenty of space to build but, plenty of competition but the housing prices are going up?...

Dapper

[nealmhughes]

22. My sister and b-in-law are amassing a small personal fortune buying dilapidated homes,

doing most of the labor in refurbishing them themselves, with me and my mom as sidekicks, save the really skilled stuff: electrical, drywall, foundation and concrete work, and then making them not merely livable, but affordable for a modest profit.

They have people who have been renting out their homes and living elsewhere offering to buy them, as they want the quick profit and none of the upkeep cost from being a landlord.

They are devout Christians and do this not merely for personal gain, but for the joy of seeing people out of substandard rentals and into above par ownership, reaping only a modest profit considering the labor that goes into this enterprise. My sister is never home, my mom has to cook dinner for her family every night, do the laundry for 2 teens and 2 adults and care for their huge dog kennel.


Everyone wants to know from where all their money comes: their answer is simple, the root of all wealth: honesty, integrity and real estate.

Now every time I see an empty house in an emptying block or a vacant red brick warehouse on the outskirts of a downtown, all I can think is "What a waste! Just a bit of elbow grease and a small construction loan..."

With the population aging and families getting smaller, doesn't buying an existing home and redoing it make the perfect financial sense, rather than going to MacMansion Land, the Whimpering Loons on the Mews Links Crossing "developments" stapled together with no trees, sidewalks or amenities other than a vapid sense of "I've arrived by my stupid address," which in reality is laughable in the established neighborhoods!

Had I the ability to redo my youth, it would be focused on rehabbing neighborhoods, house by house, building by building, and not yuppifying them, either!