http://cl.exct.net/?qs=e1e531a75b93631cbfdf32bba998ba2a3cdb48454a9515f03301efac154255a0
Click on the above link to read yesterday's report on housing starts. Building permits rose for the fourth consecutive month and this should be considered a positive sign but not so much! A rise in housing starts tells me that builders have finally reinvented their product to smaller homes on previously owned lots. They are probably making a small profit but no a signficant % profit. The increase in housing starts is minimal and it only supports the notion that the housing industry will be bouncing along the bottom for the near term. Since we are heading into fall and winter months, typically the industry reduces new housing starts. Let's compare single family housing starts during the last housing recessions:
YEAR SF HOUSING STARTS
1974 888,000
1981 705,400
1991 840,400
2001 1,273,300
2008 622,000
2009 Projected 458,000
Remember, the 20-year average for SF housing starts is 1,200,000 per year. In reviewing the above history, each recession resulted in a pent-up demand for new homes. We had V recoveries. The pent-up demand, today, is being satisfied by foreclosures. If you are a builder, how would you postion your company for 2010? I will provide you my opinons upon request.
Wednesday, August 19, 2009
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