Marketwatch's Ridiculous Prediction: Zero New Housing Starts

"At this rate, starts would fall to zero by the end of the year."

via Housing starts plunge nearly 17% to record-low 466,000 rate - MarketWatch.

It is entertaining to see extrapolation taken to such a stupid level. Homebuilders do not want to sell houses at current price levels so they have stopped building. They have all written down their land inventories and the good ones are sitting on piles of cash until the housing and mortgage markets get straightened out.

Remember it will take homebuilders 18 months to 2 years to ramp up production to anywhere near the 1 million new homes per year the economy has absorbed for the last 30 years. It will be interesting to see the results when this (new home construction & prices) market starts to turn upward.

Comments

[Rhett:]

You're right about one thing, TIm. It will be "interesting".

Feb 19 08:15 AM

[xom-only:]

your wrong about one thing, Tim. It will not take 12 months to ramp up to a million because there are more lots than that with utilities already in and waiting for concrete.

Feb 19 11:02 AM

[notsosmart:]

with app. 14.7 mos of housing available why would anybody build anything or anybody invest in this business @ this time?

Feb 19 01:52 PM

[1234987:]

Tim wouldn't it be great if we removed 2 million homes from the MLS (REO).

The laws of supply/demand would drive the prices back up & level.

The gov could sell 600 billion in RTC long term (30 year) bonds. $300,000 app each home. ( pay 20% less than first mrtg.)

Send all homes to local HUD for rental in section 8 voucher program and eventual disposition as the need for housing increases.

Wow a definite solution, with cost!!!

By the way the 20% could be added to the price of the homes when they are eventually sold to limit any losses. Also the Institutions selling the homes could absorb any losses based on the proportionate share of homes sold to the RTC. ( over the remaining years left on the bonds).

Wow limit and assess any losses!!!!

Feb 19 04:35 PM