Benny.....consider my trade, excavation and concrete construction. Capital costs are huge and represent an enormous barrier to entry. Here in Central Illinois 40% of my direct competitors have gone under, as have 30% of my former client base (homebuilders). Also consider the lending environment going forward. Banks are not now, nor will they be soon, lending money for speculative building.
The factors above are real headwinds to a ramp-up in building capacity.
Also, anyone on this thread that thinks homebuilding is as easy as playing with tinker toys should go out and frame a muti-gable roof, or perhaps set, square and pour an angled, stepped or radius foundation.
I'm in the residential construction trades and can tell you that if a home was not started by the end of March, it won't be closed by the end of June.
Here in Central Illinois we saw a large number of starts in February, a trail-off in March, then renewed interest and activity starting in April and continuing through the present. Most of our builder clients are servicing the $200K to $270K markets. Surprisingly, we are still seeing a fair number of larger homes contract for construction.
This is not to say that we're seeing significant recovery. Starts in our markets are still down 65% from the peak. But we do appear to be up modestly off the bottom.
Until confidence returns, housing is destined to bump along the bottom. Confidence won't return until employment starts a real recovery, and that won't happen as long as the current level of uncertainty (i.e. the specter of cap and tax, card check, Obamacare, and financial reform) confronts American businesses.
The Employment News Is Better Than It Looks [View article]
How many people are not seriously looking for work because they're drawing extended unemployment benefits? How quickly and to what extent would the unemployment numbers drop if extended benefits were terminated?
I have 4 positions to fill in my excavation and concrete construction company and recently ran want ads in 3 regional newspapers for a period of 2 weeks. I expected to be swamped with applicants. Instead I received responses from a grand total of 4 applicants.
Updating Our Outlook on Housing (Four Potential Scenarios) [View article]
Very thoughtful, informative article. Let's hope scenario B plays out.
I disagree with one point in the article, as stated below:
"Demand for housing starts has remained quite strong and the homebuilders have been eager to continue adding supply to the market as they attempt to remain afloat. The surge in lumber prices is consistent with the high levels of supply in the market. The builders are making the problems worse."
In actuality, housing starts have never been this low for this long in records going back to 1960. Builders are building to suit the limited pre-sold traffic they have (i.e. very little speculative building is going on). Lumber prices are rising because a great many mills have shut their doors these past 2 years, and those that remain now have some pricing power. Prices will skyrocket when building volume returns to normal.
The Ten Trillion Dollar Per Year Market [View instapost]
The Australians just suspended their carbon trading program (scheme), the French have sh1t-canned theirs, Arizona has pulled out of the western states environmental alliance, and the British are on the brink of open revolt over carbon taxation. And the geniuses in congress are feverishly working to finalize an American cap and tax program. November can't get here soon enough.
The good news is that the skeptics have real momentum, and Americans are slowly waking up. People are sick and tired of the fear-mongering and just want to get back to basics (jobs, jobs, jobs).
Like politics, all real estate is local. Those areas that escaped the worst excesses of the bubble and where the employment situation is improving are starting to show some life.
The macro view on this subject is useful in-so-much-as it helps one guage the extent of the continuing troubles in the large bubble markets. Beyond that it is of limited value.
Real Estate Prices Still Appear to Have Bottomed [View article]
Do you have anything to say about this authors contributions to SA other than personal invective?
Do us all a favor. Go back and read the predictions CPB made in late 2008 for 2009. Then come back and name another economist that even came close to his level of accuracy. Once you've done this bit of homework you might understand why the man has 26,000+ followers.
Housing Starts: It Doesn't Take Much to Show Improvement [View article]
It should be noted that the current rise in permits has nothing to do with the tax credit as the credit will expire long before the homes are saleable (or in most cases even started). The prospect of higher interest rates doesn't appear to have affected the bump in permits either.
Perhaps modest improvement in consumer confidence is pushing permits up a bit.
Is a Boom in U.S. Homebuilding Coming? [View article]
Tom,
The 18.5 million statistic you reference includes second homes. That's very misleading. When I'm in my primary home, my second home is vacant, and vice versa. The actual vacany rate is less than 1/3rd this amount.
Is a Boom in U.S. Homebuilding Coming? [View article]
It's interesting to review the comment threads on articles that postulate an improving environment for new home construction. Posts which declare the end is at hand receive very high scores and posts which offer some rational for improvement are mercilessly scored down. This is occurring across the board at SA.
The contrarian in me leads me to believe that this is yet another sign that the bottom is in on new home construction.
Is a Boom in U.S. Homebuilding Coming? [View article]
Another factor to this equation that few are aware of is the attrition rate for existing homes (homes eventually wear out and must be torn down). Homes are also torn down to make way for new commercial and residential developments. I've seen numbers ranging between 350K and 500K per year. Factor that in, and essentially no new net contribution to the total number of homes in this country is occurring. This bodes well for improvement in this industry as employment and consumer confidence improves.
Housing: Still a Drag on Economic Recovery [View article]
Tough crowd.....I was just sharing a local outlook on new home construction. As a guy who is "boot on the ground" I can tell you that housing starts are up 30% off the bottom in my little corner of the world. I agree that the market will languish for years in the large distressed metro areas that experienced grossly elevated inventories and huge price appreciation during the boom, but it bears remembering that large swaths of the country didn't participate in the excesses of the bubble, and may be poised to turn as consumer confidence returns.
All real estate is local. It matters little to a buyer in Bloomington, IL what market conditions are like in southern California, or in Chicago for that matter.
Housing Shortage Coming [View article]
The factors above are real headwinds to a ramp-up in building capacity.
Also, anyone on this thread that thinks homebuilding is as easy as playing with tinker toys should go out and frame a muti-gable roof, or perhaps set, square and pour an angled, stepped or radius foundation.
Housing's Slow, Uneven Recovery [View article]
Here in Central Illinois we saw a large number of starts in February, a trail-off in March, then renewed interest and activity starting in April and continuing through the present. Most of our builder clients are servicing the $200K to $270K markets. Surprisingly, we are still seeing a fair number of larger homes contract for construction.
This is not to say that we're seeing significant recovery. Starts in our markets are still down 65% from the peak. But we do appear to be up modestly off the bottom.
Housing Pulls Back [View article]
When You Stop Paying People Who Don't Work, More People End Up Working [View article]
If you want less of something......tax it.
The Employment News Is Better Than It Looks [View article]
I have 4 positions to fill in my excavation and concrete construction company and recently ran want ads in 3 regional newspapers for a period of 2 weeks. I expected to be swamped with applicants. Instead I received responses from a grand total of 4 applicants.
It does make you wonder.....
Updating Our Outlook on Housing (Four Potential Scenarios) [View article]
I disagree with one point in the article, as stated below:
"Demand for housing starts has remained quite strong and the homebuilders have been eager to continue adding supply to the market as they attempt to remain afloat. The surge in lumber prices is consistent with the high levels of supply in the market. The builders are making the problems worse."
In actuality, housing starts have never been this low for this long in records going back to 1960. Builders are building to suit the limited pre-sold traffic they have (i.e. very little speculative building is going on). Lumber prices are rising because a great many mills have shut their doors these past 2 years, and those that remain now have some pricing power. Prices will skyrocket when building volume returns to normal.
The Ten Trillion Dollar Per Year Market [View instapost]
www.investors.com/News...
The Ten Trillion Dollar Per Year Market [View instapost]
The good news is that the skeptics have real momentum, and Americans are slowly waking up. People are sick and tired of the fear-mongering and just want to get back to basics (jobs, jobs, jobs).
Good to see you posting here again YH.
Nine Years' Worth of Homes [View article]
The macro view on this subject is useful in-so-much-as it helps one guage the extent of the continuing troubles in the large bubble markets. Beyond that it is of limited value.
Real Estate Prices Still Appear to Have Bottomed [View article]
Do us all a favor. Go back and read the predictions CPB made in late 2008 for 2009. Then come back and name another economist that even came close to his level of accuracy. Once you've done this bit of homework you might understand why the man has 26,000+ followers.
Housing Starts: It Doesn't Take Much to Show Improvement [View article]
Perhaps modest improvement in consumer confidence is pushing permits up a bit.
Is a Boom in U.S. Homebuilding Coming? [View article]
The 18.5 million statistic you reference includes second homes. That's very misleading. When I'm in my primary home, my second home is vacant, and vice versa. The actual vacany rate is less than 1/3rd this amount.
Is a Boom in U.S. Homebuilding Coming? [View article]
The contrarian in me leads me to believe that this is yet another sign that the bottom is in on new home construction.
Is a Boom in U.S. Homebuilding Coming? [View article]
Housing: Still a Drag on Economic Recovery [View article]
All real estate is local. It matters little to a buyer in Bloomington, IL what market conditions are like in southern California, or in Chicago for that matter.