Posted on 11/20/2007 5:50:36 AM PST by Hydroshock
U.S. home construction starts were up 3 percent in October, the biggest monthly gain in eight months, but building permits were down 6.6 percent to a level not seen in 14 years, a government report on Tuesday showed.
The Commerce Department said housing starts set at an annual pace of 1.229 million units in October from a 1.193 million unit pace in September. It was the biggest monthly increase since February and came after starts tumbled 11.4 percent the prior month. Economists were expecting to see a slight decrease in starts to a 1.17 million unit pace from the initially reported 1.191 million pace.
RELATED LINKS Latest Economic News
Building permits fell 6.6 percent in October to a 1.178 million unit pace. That was the lowest level since July 1993 and well below the 1.200 million unit level economists were expecting.
(Excerpt) Read more at cnbc.com ...
If I were looking to just enter the housing market, I would rent. When the bottom hits - probably around 2011 or 2013 - and then starts up again, I would buy. It would be slightly above bottom, but I would rather buy then, then by now, when the prices have JUST fallen off the cliff.
In a world where tulip bulbs cost as much as a small farm, the guy selling one for the price of a house looks like he’s offering a good deal.
He isn’t. People need to shift their price paradigm into the real world, but the prices will fall whether they do or not.
>>I believe in the free market but I also see the need for some govt help, guardrails at times.<<
I don’t.
No, you saved money for a rainy day. The rainy day is here and you use that money.
For those that did not save money, well, reality is a harsh teacher.
We could probably weather a storm...but a lot of people could not.
Well anyway that was my point on the original “have no plywood and no way to get it” comment.
>>We could probably weather a storm...but a lot of people could not.<<
And that is why they called it the great depression.
Right? :-)”
I can’t really afford to build an interstate highway on my own, but think it’s a good idea to have one.
.
I really like having the stealth bomber to protect our country but I can’t really afford to buy one.
I also think it’s a really good idea to have the govt as a stabilizing force to prevent economic panics and hyperinflation, but again I really can’t do that on my own.
Do I want the govt to collect and spend money for Social Security? No.
Do I prefer govt schools (which were ridiculed by our Founders in their writings) that indoctrinate kids with leftist propaganda? No again
etc...,
In a related report/survey of the NAHB, only 1 out of 5 homebuilders are optimistic about the near term for homebuilding.
That means that 80% are probably looking to pull in their horns, especially the big mass builders of spec homes, and those who can will focus on custom homes for folks with committed loans.
Hi Brian, Not at all. The 'starts' are on homes whose permits were already were processed.
Many subdivisions are approved with roads and sewers being completed, but foundations of homesites not poured.
The fact that permits are down are an indication that builders are scrambling to get finished on lots they are paying interest to banks, etc..
>> I also think it’s a really good idea to have the govt as a stabilizing force to prevent economic panics and hyperinflation, but again I really can’t do that on my own.
Ah, the crux of the matter.
Do you want “the government” to “stabilize” the economy by lowering interest rates, thereby rewarding the speculators who caused the current bubble with inflation and more rising prices for their ponzi scheme, but punishing savers and wise borrowers who rely on low inflation?
Or would you rather keep inflation under control by placing rates where they belong in an economy comprised of too many drunken borrow-and-spend sailors? In other words, let the market punish those guilty for the excesses of the housing bubble (and let the chips fall where they may)?
Whose ox ought the government to build a pen around? Because, by definition the “guardrail” you desire keeps someone in, and shuts someone out.
We're seeing REAL TIME pain and suffering by people who made a very healthy income just a few years ago. I know one lender [20 years experience] that has been literally living on credit cards for more than a year.
If homes aren't selling, carpet layers, drywall and floor installers, plumbers, etc., are all scrambling for the work out there today...which is a drop in the bucket compared to a couple of years ago.
Do you not think the savers have benefited from the “bubble”.
Have not savers who own Home Depot stock, etc not benefited from the housing “bubble?
I believe that we are all in this economy together and that a rising tide lifts everyone’s boat in general.
You and I both realize that cycles in various markets do happen, but some people here seem to brush it off as a “woulda, shoulda, coulda” holier-than-thou attitude and that neither helps those affected, nor themselves. They also aren’t as “insulated” from the effects as they think they are.
Some people have been posting economic-doomsday scenarios on FR for 3 or 4 years. Yes, eventually there will be an economy-wide recession and they will crow, “I told you so!” But I won’t be impressed ...
>> Have not savers who own Home Depot stock, etc not benefited from the housing “bubble?
Not over the long haul, if the runup in price of Home Depot and similar stocks was built on a house of cards.
>> I believe that we are all in this economy together and that a rising tide lifts everyone’s boat in general.
A rising tide of real productivity does, in fact, lift everyone’s boat.
But when plentiful capital is used not to produce but to raise asset prices in a speculative bubble, everyone is harmed.
Happened in the dot-com bubble of 99-01. Happened over the last few years with housing.
Pretending that speculative excess is somehow a good thing, to be nourished and sustained, is a path to economic ruin.
Postponing the day of reckoning by government bailout only makes the disaster worse.
That makes sense, as homes are in reality [no pun] a HUGH liability.
Only time a home is an asset is when the renters are making the mortgage, insurance and taxes for you as that home appreciates.
Oh, and by the way, Home Depot has LOST 25% of its “value” in the last year.
I put “value” in quotes, because it’s not clear it was ever really “worth” what was being paid for it.
Kind of like most houses and real estate, now.
One writer made an interesting observation about this. I do not remember his exact words but it went like this: These things always take longer to get here than people expected, but once here, they unfold faster than people expected.
There is positive news, no doubt about it. But it is a mere drop in the bucket compared to the bad news staring everyone in the face.
My first hint that we had a problem was when my wife (then a real estate agent) told me one day several years ago that the ~30% number for housepayments (as a percentage of your takehome pay) was being abandoned for something around ~50%. I said back then that they were merely creating demand for homes - which would temporarily raise prices - but would be bad in the long run.
That 50% thing seems like the hight of responsibility compared to what followed. And the simple fact is that you cannot sustain an economy that is propped up by people using their homes as ATM’s in a falsely rising market.
That is called a Pyramid scheme and they ALL end very badly. This one only took longer because they kept putting off the day of reconning by making it easier and easier to buy a home - thereby continuing to prop up a false demand.
And the longer you put off the end of a pyramid scheme, the more people it affects.
Some people (me included) were saying two years ago that this could be as bad as, or worse than, the great depression. It was not lost on any of us when the CEO of Wells Fargo said that the last time some of our housing numbers were as bad as they are was during the great depression.
But the really bad news is that this is JUST BEGINNING. This year gave a glimpse of how bad it is going to be when it hits. Next year is when it actually hits.
>>A rising tide of real productivity does, in fact, lift everyone’s boat.
But when plentiful capital is used not to produce but to raise asset prices in a speculative bubble, everyone is harmed.<<
You’ve nailed the key to this whole thing.
When you have a major part of the poplulation getting rich by working and producing value for others, you have a strong economy.
When you are watching a major part of the population get rich simply by sitting in their homes and pulling value out of their equity, you have the same situation we had going into 1929. It is a house of cards and it WILL come down. And the higher the house, the greater the damage.
When you have
You're absolutely correct.
The loudest, shrillest words coming out of the Hildebeast's mouth?
..."IT'S THE ECONOMY, STUPID!"
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.