Updated - The Relationship between Housing Starts, Unemployment and Oil

Updated Relationship between Housing Starts, Unemployment and Oil:

Year                Housing Starts            Unemployment Rate (%)        Barrel of Oil Cost

1979                1,745,100                                5.9                               $74

1980                1,292,200                                6.3                               $99

1981                1,084,200                                7.5                               85

1982                1,062,200                                8.6                               71

1983                1,703,000                                10.4                             63

1988                1,488,100                                5.7                   $23 - $38

1989                1,376,100                                5.4                   from 1988 - 1994

1990                1,192,700                                5.4

1991                1,013,900                                6.4                   deep recession for housing

1992                1,199,700                                7.3

1993                1,287,600                                7.3

1994                1,457,000                                6.6

1999                1,640,900                                4.3                   $21 - $34

2000                1,568,700                                4.0                   from 1999 - 2002

2001                1,602,700                                4.2

2002                1,704,900                                5.7

2006                1,800,900                                4.7                               $63

2007                1,355,000                                4.6                               67       

2008                   905,500                                7.7                               $92     

2009                   554,000                                10.1                             54

2010                   587,600                                9.8                               70

I prepared this data stream back in 2010 due to the lack luster real estate market. I have provided the actual compared to the estimates by the “experts”

                       

Est. 2011                                                         9.4?                             $98??

Fannie Mae     710,000                      

NAHB              575,000

2011                587,000                                   9.6%                            $89

2012                781,000                                   8.1                               106.1 (high in March)

2013                925,000                                   7.4                               97.6

April 2014        1,000,000 est                          6.3%                          96.5 est

It is difficult to compare historical trends with current status of housing and especially difficult to forecast. However, it is clear to me that everything remains upside down.

Housing Starts – shows a methodical improvement since 2011 but new housing starts continue well below the annual needs of 1,200,000 starts per year.  

The great recession reset what we know to be true and the transformation of America has solidified a course toward uncharted waters – none of which is good for you and me!

Random Observations:

            Housing starts have increased due to pent-up demand and the lack of inventory

            Interest rates will rise and the Fed will not be able to control inflation

            Housing will again stall due to interest rates and sustained high oil prices

            Unemployment rate will continue to fall not due to job creation but by lack of participation

            Oil prices will stay high regardless of increased domestic oil supply

           

As housing goes so goes the economy…….our optimism will not overtake reality.

Starting Tuesday of next week, I will be posting about land, land inventory, and land prices.