Posted on 04/18/2023 6:28:08 AM PDT by Kaiser8408a
It’s springtime for housing! But winter for the mortgage market.
US housing starts have declined in March by -17.2% since the same time last year (YoY) as The Fed rapidly removes Covid-related monetary stimulus (green line).
On the positive side, 1-unit detached housing actually rose by 2.74% from February to March (MoM). However, 5+ unit (multifamily) starts decline -6.71% MoM. Permits are similar: 1-unit permits were up 4.07% in March from February while 5+ unit permits were down -24.27%.
Housing starts out west were down -28.13% MoM as people are escaping “Gruesome Newsom Land” (aka, California). Starts are up by 6.8% MoM in The South.
“Hey Aunt Nancy, do you think American voters will vote for me for President after I helped destroy California? Can I be President and spend like a mad man like you did as Speaker of the House??”
(Excerpt) Read more at confoundedinterest.net ...
One of the major segments in the housing/construction market this year will be additions to existing single family homes.
This is because almost all existing homeowners now have a mortgage rate several points under current rates. So, IF you sell your existing home to move into something larger your mortgage rate goes up significantly. However, you have gained a lot of equity in your current home in the last five years.
So, in most cases, it makes sense to add on or remodel your existing home instead of moving.
This is NOT actually terrible news. It’s actually above pre-covid levels, down sharply from a year ago, but holding steady for several months.
1.4 Million housing starts is actually a pretty solid number in historical numbers.
In 1972 we did over 2.4 million(but houses were on average smaller)
In 2004/2005 we over 2.2 million starts.
In January 2009 we had dropped to 480K.
Other than during the spring of 2020 when everything came to a halt due to covid, we have generally been on a steady increase since January 2009.
Here is the graph for annual starts:
https://en.wikipedia.org/wiki/Housing_starts#/media/File:US_housing_starts.png
Well, you’re not showing the 2021-2022 swoon, but the the important part is that the industry stabilized in late 2022, and while it didn’t recover from that swoon, it’s stayed higher than at any point between 2006 and 2020.
But wouldn’t most people have to finance such work at high interest rates? I think more likely is most people with low mortgage rates will do the bare minimum, while they just stay in their home.
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