Housing starts plunge to 6 year low

From Marketwatch:

U.S. housing starts plunge 14.6% to 6-year low

WASHINGTON (MarketWatch) – Starts of new U.S. homes plunged 14.6% in October to a seasonally adjusted annual rate of 1.486 million, the lowest level in more than six years, the Commerce Department estimated Friday. Building permits fell 6.3% to a seasonally adjusted annual rate of 1.535 million, the lowest level in nine years. It was the largest percentage decline in permits in seven years. Housing starts are now down 27.4% from October 2005 levels. Building permits are down 28% year-on-year. The decline in October was much larger than expected by Wall Street economists, who were forecasting a 4.5% drop in starts to 1.69 million. Building permits were expected to fall about 1% to 1.62 million.

From the U.S. Census Bureau:


Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,535,000. This is 6.3 percent (±1.2%) below the revised September rate of 1,638,000 and is 28.0 percent (±1.2%) below the October 2005 estimate of 2,131,000.

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,486,000. This is 14.6 percent (±7.6%) below the revised September estimate of 1,740,000 and is 27.4 percent (±5.3%) below the October 2005 rate of 2,046,000.

Privately-owned housing completions in October were at a seasonally adjusted annual rate of 1,953,000. This is 3.8 percent (±7.9%)* below the revised September estimate of 2,031,000 and is 0.7 percent (±7.5%)* below the October 2005 rate of 1,967,000.

Will be updated as new reports are released

This entry was posted in Housing Bubble, National Real Estate. Bookmark the permalink.

83 Responses to Housing starts plunge to 6 year low

  1. BC Bob says:


    What else can you say???? Again, fasten your seatbelts, the carnage is coming.

  2. SAS says:

    “Housing starts plunge to 6 year low”

    Post that up at the Kinmat web site… those guys will pull that quicker than you can say housing bubble.


  3. Lindsey says:

    That’s some cold water for the RE hypers. Lereah will of course spin this as a necessary correction, blah, blah, blah, because it is not his ox being gored.

    The pullback by the builders was coming sooner or later, and there is no surprise in predictions missing on the high side, psychology won’t turn until the market beats people’s brains in.

    Wasn’t it just yesterday that we were marvelling at the 81% of homeowners who think their home’s value will rise or stay the same this year?

  4. twice shy says:

    From AP:

    “The only region showing strength was the Northeast, where construction jumped by 31 percent.”

    It is different here. Any thoughts?

  5. James Bednar says:

    The 31% change was due to a steep dip in starts last month. Year over year the NE is down 2.9%.


  6. James Bednar says:

    September starts were revised lower as well, from 1.77 to 1.74.


  7. NJGal says:

    Where do the recent starts stand in relation to more “normal” years? Even if this means they are cutting back, are we still looking at a record number of starts, thereby keeping inventory at record levels?

  8. skep-tic says:

    small YoY change in the NE though.

    could it be because projects in the NE take longer to get through the regulatory pipeline than in the South and West?

    fine by me if builders in the NE want to continue building through the downturn.

  9. James Bednar says:

    I don’t think my memory is failing me, but the weather was pretty nice in the NE last month.


  10. SG says:

    This is funniest marketing I have seen so far.

    Following AD was placed on Crigslist for TWH Queens, but the AD is not in NY region. It has been actually listed in MUMBAI/BOMBAY – INDIA listings.


    This guy writes:

    We can help u get started in New York, meet you at the airport with someone who speaks your language, show your the area Shiva and Krishna temples, help you get settled in your new home, show u your children’s schools and help u get jobs.

    This is funny as the AD remax did where Chinese family arrives at airport and Remax agent is picking them up.

    No Immigrant would buy a house like that. Normally it takes at least 5 years of Rental before they can make jump to buy a house. It takes time to adjust to new country and have finances to buy a house.

    I guess RE Agents are really struggling to find buyers. BC BOB Keep up the good work.

  11. BC Bob says:

    “This is a shocking number,” said Phillip Neuhart, an economist at Wachovia Corp. in Charlotte, North Carolina. “The market is going to remain weak well into next year.”


  12. BklynHawk says:

    Since I’ve had to do research on new home construction by region, I’ll tell you that the NE is the smallest percentage of overall new home construction. That means fluctations in this region have very little effect on the overall number. This region is considered more like Europe, read mature. Although, the last few years saw extra-ordinary growth, you’ll see it revert to a very slow growth/mature rate.


  13. AL says:

    Builders in NE are finishing existing projects and after that they are done… Wait for the stats for next summer – it will be down to almost zero….

  14. curiousd says:

    the ‘like europe’ statement seems to come up a lot now for NE. this will mean more density around urban areas and less price fluctuations. it also will mean a generally lower standard of living… IF they’re right.

  15. James Bednar says:

    it will be down to almost zero…

    Short of a massive depression, I have doubts we’ll see starts fall to zero in the Northeast. Remember, we’re talking Northeast, not North Jersey.


  16. twice shy says:

    re: NE strength anomaly

    Yes, aside from a few rain events, the weather has been unusually mild. I can’t believe they’re still building on spec full steam ahead. Maybe they’re rushing to complete projects already in the pipeline. I’m no expert on residential construction cycles, so am just guessing here. The steep dip in starts last month Grim cited could mean they’re making up for lost time. I’m also not sure where in the NE this 31% increase is coming from. New England? Doubtful. Jersey, CT, PA?

  17. v says:

    twice shy,
    Wherever it is, it is good news for buyers. More inventory in prevailing market conditions is always welcome.

  18. Lifelong renter says:

    The 31 pct jump in NE seems to be in multifamily dwellings. Single family homes made up only a small part of the increase and overall starts are down about 7 pct from August.

  19. BC Bob says:

    NYMEX, Symbol NMX;

    IPO priced at 59 opens at 120!!! Looks like the investment community has a huge appetite for energy and metals, while the dollar continues its slow, grinding, downward trend.

  20. twice shy says:

    post #18

    Thanks. Now these numbers are beginning to make sense.

  21. James Bednar says:

    Damn that nmx, opened way over my limit. I expected a pop, but nothing like that.

    Note: Any discussion about securities is purely for entertainment. This discussion does not, in any way, shape, or form, constitute a recommendation to buy, sell, or even think about doing anything with securities.


  22. rhymingrealtor says:


    Regarding your post to me of last night, email me at rhymingrealtor@yahoo.com


  23. BC Bob says:

    “Damn that nmx, opened way over my limit”


    I feel your pain!!

  24. James Bednar says:

    Eh, no big loss, it was worth it for the enjoyment value alone. Sure did feel like the late 90s all over again.

    Perhaps I should be my own contrarian indicator..


  25. James Bednar says:

    CR always does a great job with this data:


    He is estimating anywhere from 400,000 – 600,000 job losses over the next 6 months.


  26. Sapiens says:


    Not a bank run, but trying to monetize as much cash as possible before the bankruptcy rush… Hence the phone call ahead….


  27. Analysts had to lower their estimates again to make it look good to investors …LOL !!!

    Remember D.R. HORTON beats analyst earning estimates and most of the Homebuilders` stocks went up… lol

    Now reality sets in again !!!

    Home builders slam on the brakes
    Housing starts hit six-year low while permits, a key sign of builder confidence, slide to the lowest since 1997.
    By Chris Isidore, CNNMoney.com senior writer
    November 17 2006: 10:04 AM EST
    NEW YORK (CNNMoney.com) — New housing starts sank to the lowest level in more than six years in October and a key measure of builders’ confidence in the market hit a nine-year low, a government report showed Friday.

    Both housing starts and applications for new building permits tumbled well below Wall Street forecasts – a sign that the slumping housing market has not yet hit bottom.

    “Today’s figures clearly reveal that a quick turnaround in this sector is not just around the corner,” said Anthony Chan, chief economist for JPMorgan Chase Private Client Services. “Any real turnaround may not be forthcoming until the central bank reverses course and begins to lower short-term rates again.”

    Housing starts plunged nearly 15 percent to a seasonally adjusted annual rate of 1.49 million in October from a revised 1.74 million in September, according to the Census Bureau report. That was the lowest reading since July 2000.

    Building permits, seen as a measure of builder confidence in the real estate market, fell to the their lowest pace since December 1997, coming in at 1.54 million, down from 1.64 million in September.

    Economists surveyed by Briefing.com forecast that starts would fall to an annual rate of 1.68 million and permits to 1.625 million.

    Another sign of weakness in the housing market came when a realty tracking firm reported Friday that home foreclosures rose once again in October, climbing 42 percent from year-earlier levels.

    There had been hopes from other recent real estate reports that perhaps the slump in home sales and home building had bottomed out.

    The National Association of Home Builders’ survey of builder confidence for November posted a modest increase for the second month, even though far more builders still saw the market as poor rather than good. And housing starts rose in September, although permits fell.

    In addition, mortgage rates fell sharply this week, with the average 30-year fixed rate mortgage dropping to 6.24 percent from 6.33 percent a week earlier, according to mortgage financier Freddie Mac. And mortgage applications climbed to their highest level since January in the most recent weekly reading from the Mortgage Bankers Association.

    But other reports have showed weakness in prices for both new and existing homes, as inventories of both types of homes available for sale climbed to record levels. And home builders have reported having to offer attractive deals to move homes they have completed.

    Major home builders have been reporting lower earnings and cutting forecasts for future results due to the downturn in new home sales.

    Pulte Home (Charts), the nation’s largest home builder, became the latest to report a stepper-than expected drop in earnings earlier this week, and cut its outlook.

    Other home buildings reporting problems include Centex (Charts), D.R. Horton (Charts), Lennar (Charts), K.B. Home (Charts) and Toll Brothers (Charts).

  28. AntiTrump says:

    Pulte has a bunch of town homes called Pulte Manors or something priced at $999999 (Atleast it is less than $1M) that have been gathering dust on the market for about a year now. A flipper had put an ad in the New Yor Times weekend real-estate classifieds section, trying to flip the same unit for $1.4 mill. These units have very few upgrades options as most of the top of the line upgrades are already included. So this idiot is trying to make a 400K profit on a town home which the builder is now offering for $999,999.

    Guess he might find a bigger idiot to buy it off him.

  29. James Bednar says:

    This might just be the best one-liner spoken by an economist (relating to housing of course):


    Ian Shepherdson, High Frequency Economics’ chief U.S. economist, on Friday called October’s 15% decline in housing starts “a sharp poke in the eye for those who argued that September’s jump in starts was a signal that the housing crunch is coming to an end.” In a research note, Shepherdson wrote that the September gain was largely a weather-driven spike and said he expects housing to be a big drag on the nation’s fourth-quarter GDP. “It’s not over,” he wrote.

  30. James Bednar says:

    Anyone have any more information?

    Dollar falls on talk of problems at hedge fund

    The dollar fell against the euro and yen in mid-morning trade Friday on market talk that a major hedge fund is in trouble.”Rumors of a major U.S. hedge fund collapse appear to be behind the dollar’s latest dip,” said Brian Dolan, director of research at Forex.com, a division of Gain Capital. Others traders said the speculation centers on Citadel Investment Group. The euro was last up 0.3% at $1.2833, while the dollar fell 0.5% at 117.60 yen.

  31. Nothing less than 25% off peak 2005 says:

    Read My Lips Lalalalanders. KEEP BUILDING BUILD BUILD BUILD…



  32. Nothing less than 25% off peak 2005 says:

    Another Hedgeee Punk bites the dust..



  33. FirstTimeBuyer says:

    What does anyone know about Cedar Grove?

  34. chicagofinance says:

    love the headline……………

    Wall Street Journal

    False Bottom?

    November 17, 2006; Page C1

    Investors sniffing for a bottom in the housing market need to be careful where they put their noses.

    Home-building stocks have run up over the past four months. Since hitting a low in July, the Dow Jones index of home-building stocks has risen 23%. (It’s still 39% below its July 2005 high.) Amid recent signs that the housing market has begun to stabilize, investors will be looking to today’s report on housing starts and building permits from the Commerce Department for confirmation that the bottom is really in place.

    It’s a dangerous game. Signs that the housing market is coming out of its decline are tentative at best. Yesterday, the National Association of Homebuilders reported that for November its measure of builders’ assessment of the market, while still low, rose for the second month in a row. In its most recent survey of consumers, the University of Michigan saw a sharp swing higher in the number of respondents who said that now is a good time to buy a house.

    On the other side of the ledger, lumber prices are at their lowest level in nearly four years. Masco, a building-supply company that works with builders across the country, has said it expects new construction will be started on 12% fewer houses in 2007 than this year, matching its forecast decline for this year.

    Economists polled by Dow Jones Newswires estimate that today’s report will show that housing starts slipped by 5.6% in October. But they expect that building permits, which haven’t had an up month since they started crashing lower in February, nudged 0.1% higher.

    Lehman Brothers economist Ethan Harris thinks that housing sales really are beginning to stabilize. But given the large number of homes on the market, many of them empty, the worst may still not be over for building activity. And if prices keep falling, sales could continue to suffer.

    Meantime, Bollinger Capital Management head John Bollinger has a proverb worth keeping in mind — that there is a small god of the trading pit who will allow you to pick the top once, pick the bottom once, and be wrong as often as you choose.

  35. BklynHawk says:

    Half of the 400-600K job losses will be in FL and CA alone. Then concentrate another 1/4 in SW/SE. The rest spread around the country.

    But, I even think the Florida jobs will transfer to Hurricane repairs. There are still plenty of houses/buildings with damage that need work because all the construction workers were working on new homes.


  36. BC Bob says:


    I have a message into him. I don’t know if I’ll be able to speak to him today, he is jammed up with reporters.

    Citadel Investment Group is a 12 billion dollar Chicago-based hedge fund founded by billionaire trader Kenneth C. Griffin, and is one of the world’s largest hedge funds. The firm is known for its daily trading volume, which amounts to 1-2% of daily trading activity in New York and Tokyo

  37. thatbigwindow says:

    Prominent Real Estate Office in Saddle River is seeking a Marketing Assistant to the manager. Responsibilities include heavy phone work,agent support, preparation of marketing materials, and creation of specialty marketing pieces. Computer knowledge required, Design experience would be helpful. Please submit resume with qualifications via e-mail, interviews to begin next week.

  38. Sassy says:

    Bad news about Citadel, my baby bro’ used to work for him (sure glad he left recently). All his buds are at Amaranth now. Rut Row.

  39. Sassy says:

    uh…were at Amaranth. Shouldn’t type and eat.

  40. James Bednar says:

    From Forbes:

    Bleak Housing

    The pitifully weak American housing market was even more pitifully weak than economists suspected last month, but investors do not seem to fear that the sector’s problems will lead to a nationwide recession.

    That’s a “sharp poke in the eye for those who argued that September’s jump in starts was a signal that the housing crunch is coming to an end,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

    The tumbling housing market, he added, will be a bigger drag on economic growth in the fourth quarter than it was in the third. In the July-September period, the housing slump knocked a percentage point off gross domestic product growth, as the U.S. economy expanded at a sluggish rate of 1.6%.

    Not everyone agreed. Former Federal Reserve Chairman Alan Greenspan said earlier this month that the worst of the slide has passed.

    “I think that while we are past most of it, there are a lot of negatives. But it is no longer subtracting from growth,” he said.

  41. twice shy says:

    BC Bob,

    Citadel is one the the world’s largest hedge funds?
    Holy Sh**t, this story could have legs. I’m all ears.
    Haven’t watched CNBC much today, but when I have they haven’t reported on it. I suppose Faber or somebody is working on the story. If this one is confirmed, could be a big shoe to drop.

  42. Julie says:

    sorry don’t know how to paste a link.. thought this was interesting…

    GOLDEN, Colo. — A judge has upheld a homeowners association’s order barring a couple from smoking in the town house they own. Colleen and Rodger Sauve, both smokers, filed a lawsuit in March after their condominium association amended its bylaws last December to prohibit smoking. “We argued that the HOA was not being reasonable in restricting smoking in our own unit, nowhere on the premises, not in the parking lot or on our patio,” Colleen Sauve said.

    The Heritage Hills #1 Condominium Owners Association was responding to complaints from the Sauves’ neighbors who said cigarette smoke was seeping into their units, representing a nuisance to others in the building.

    In a Nov. 7 ruling, Jefferson County District Judge Lily Oeffler ruled the association can keep the couple from smoking in their own home. Oeffler stated “smoke and/or smoke smell” is not contained to one area and that smoke smell “constitutes a nuisance.” She noted that under condo declarations, nuisances are not allowed.

    The couple now has to light up on the street in front of their condominium building.
    “I think it’s ridiculous. If there’s another blizzard, I’m going to be having to stand out on the street, smoking a cigarette,” said Colleen Suave. For five years the couple has smoked in their living room and that had neighbors fuming. “At times, it smells like someone is sitting in the room with you, smoking. So yes, it’s very heavy,” said condo owner Christine Shedron.
    The Sauves said they have tried to seal their unit. One tenant spent thousands of dollars trying to minimize the odor.

    “We got complaints and we felt like it was necessary to protect our tenants and our investment,” said Shedron. The Suaves said they would like to appeal the judge’s ruling but are unsure if they have the money to continue fighting. They said what goes on behind their closed doors shouldn’t be other people’s business.

    “I don’t understand. If I was here and I was doing a lawful act in my home when they got here, why can they say, ‘OK, now you have to change,'” said Colleen Suave. “We’re not arguing the right to smoke as much as we’re arguing the right to privacy in our home.”
    Other homeowners believe, as with loud music, that the rights of a community trump the rights of individual residents. The HOA is also concerned that tenants will sue those homeowners for exposure to second-hand smoke and this could be a liability issue.

    The couple said that they would like to unload their condo and get out of the HOA entirely, but they are not sure if the real estate market is right.

  43. Jaywalk says:


    I’m no longer a smoker (although I do have fond memories of many good years).

    To my mind, this is yet another reason not to buy a condo/townhouse. If I want to play by someone else’s rules, I might as well rent. Why have the responsibility without the freedom of choice?

    By the way, here’s how to post a link:

    With the site you want to link to on your screen, right click on the web address in the address bar, then click “copy”. Then come back here and right click again, and choose “paste”. Voila!

  44. Spelunker says:

    perfect opportunity to quit i would think.

  45. BC Bob says:


    I don’t know anymore than what was reported on marketwatch. I’m trying to find out, it’s difficult right now.

  46. chicagofinance says:


    Q: If you think that Citadel is getting calls, is it possible that it is one reason that crude is selling off, USD down…….

    do you recall this…..

    “If you told me I had to go long or short today, I would go long,” betting on higher prices, said Pickens

  47. sue says:

    Last summer, I stayed at a Jersey shore motel that had both smoking and non-smoking rooms. I asked for a smoking room. My room was the only room on the first floor where the “no smoking” sign had been removed.

    Meanwhile, in front of every room, there were two lawn chairs with a big plastic ashtray in-between – and lots of people were sitting in front of their rooms and smoking. So to walk along the walkway, you had to walk past lots of people smoking.

    So if non-smokers are looking to avoid second-hand smoke, I don’t see where this is a logical policy.

  48. James Bednar says:

    Nice catch there cf.


  49. Nothing less than 25% off peak 2005 says:

    Ponzi scheme is defined by Wikipedia as:

    A fraudulent investment operation that involves paying returns to investors out of the money raised from subsequent investors, rather than from profits generated by any real business. A Ponzi scheme offers high short-term returns in order to entice new investors. The high returns that Ponzi schemes advertise require an ever-increasing flow of money from investors. Once the flow of new investment stops, the scheme is doomed to collapse.

    Housing ponzi scheme anyone?

  50. chicagofinance says:

    grim: I know Pickens likes oil, but he’s only been on record blabbing about natural gas. However, it is not a big leap.

    Still, I’m assuming if there is an issue, no one goes live with a story unless it is #1 substantiated and #2 all the big boys have ample time to cut bait before the hoardes stampede into the room. If this story is still percolating, I’m sure people are going to be fuming at whomever let it slip to Marketwatch. It would be like having Yahoo!Sports break the story that A-Rod was traded from the Yankees.

  51. DebtVulture says:

    I have not been able to confirm the validity of the Citadel rumor and I talk to salespeople who cover them.

  52. SAS says:

    I didn’t know crude was selling off?

    or did I miss something major? I see the little guy getting out, thats about it. Thats because the little guy has no guts.

    what did I miss? I have been trying to find a coffee pot “Made in the USA” all day today, and I just can’t do it. I might just have to break down and but one of those damn “Made in China” ones.


  53. SAS says:

    also, don’t underestimate crude.

    It can (and I think it will) go up, just as quick as it has come down.

    Keep your eyes on Taiwann, or have we forgotten?
    China has not forgotten.


  54. Al says:

    I just do not get it- dow in heading towards 13000. Where are the money to push it that high are coming from????
    At what point Dow itself will cause inflation???
    If company doubled in 2 month – is it 100% inflation or actuall value of the company went up 100% and why???

    DId actual value of all US companies in average goes up 0.14% a day – 40% a year??? Who needs GDP to grow when you stocks growing like this???

    I just do not get it…..

    In the last 3 month my Generic mutual fund made 8%(not APY- in 3 nonth so thats 32% up….) – thats just in the last 3 month – I might as well quit my job since I am making more money from stocks/month not really but If I’d had 200K in it – it would be 24K in 3 month……not too bad… So any comments on that one????
    BTW – beats the living @#$% out if houses right now…

  55. skep-tic says:

    interesting how CR notes that completions haven’t fallen off yet from all time highs. way more inventory coming our way soon.

    couple of anecdotes from my neck of the woods:

    first, there’s this condo development in Greenwich that has been advertising with these obnoxious posters at my Metro North station for at least 6 months (all of the posters are filled with super snobby waspy looking models with sweaters tied around their necks– seems vaguely racist to me and I’m a wasp).

    The posters never listed prices, just said “luxury condos for less than you think.” Well, this week, the posters changed. Now they have prices, but they list $500k for a 1 BR, $650K for a 2 BR and $770k for a 3 BR. Apparently, they consider this cheap! Maybe you get a free croquet set with your half million dollar 1 BR.

    Second item I noticed is that there’s an auction happening in Bedford, NY in a couple of weeks for a spec mansion that the builder just abandoned mid-construction. From the pictures, it looks like it was supposed to be a $5M+ house. Given the ridiculous amount of high end inventory, I wonder if we’ll start to see more auctions like this soon

  56. Nothing less than 25% off peak 2005 says:


    It’s Payback time baby.



  57. NJGal says:

    “Now they have prices, but they list $500k for a 1 BR, $650K for a 2 BR and $770k for a 3 BR. Apparently, they consider this cheap!”

    I guess that is cheap for Greenwich, but who moves to Greenwich to buy a 500K one bedroom condo???!

  58. Jay says:

    Housing Free Fall Turning into Meltdown…2007 Recession Ahead
    Nouriel Roubini | Nov 17, 2006

    For the last few weeks and months I have been writing dozens of detailed notes and blogs (see my latest here) rebutting the utter nonsense that has been spewed – based on little or no data – on the alleged bottoming out of the housing recession. Even Alan Greenspan – the allegedly careful reader of macro data – had joined this cheerleading clown show and the NAR spin of half-lies that “we are near the bottom of the housing recession”. The actual data that were coming out of the housing market in the last few weeks were clearly inconsistent with this cheerleading non-sense and spin. So, maybe these delusional optimists will now shut up for a while and listen to the numbers after today’s announcement that housing starts fell over 14% last month and that they are now at their six year low. Even worse, building permits, that are THE leading indicator of future housing activity, fell further by 6.3% and they are now at their lowest level since 1997.


  59. Jay says:

    Economist Roubini will be featured in the lead long segment on housing tonite on the PBS TV NewsHour (right after the news summary). Channel 21 at 6:00, channel 13 at 7:00 in New York.

  60. chicagofinance says:

    Al Says:
    November 17th, 2006 at 3:42 pm
    I just do not get it- dow in heading towards 13000. Where are the money to push it that high are coming from????

    People are pulling excess capital out of residential real estate in the United States and putting it to work in the largest and most financially robust global companies. Over the last 5 years, these companies have becomes cash generation machines [benefitting from the same global liquidity glut as RE], but valuations have not kept pace [the most familiar description would be P/E compression on large cap value stock prices]. Well, most companies [other than IBanks] have not substantially increased profits in these few months. However, if you were looking to diversify out of real estate and had concerns about a recession, where would you go? YES. Just note that now, we are so late in the year, there are many money managers that missed the boat on large cap value, and everyone is going to be moving in that direction for the next 4 weeks before they throw in the towel for the year.

    As grim says: just my US$0.02


  61. chicagofinance says:

    I forgot the disclaimer – this opinion is not a solicitation to buy or sell securities. You must not rely on this information to make investment decisions. You should consult advice befor committing money to an investment. Listening to chicagofinance on an essentially anonymous internet message board is punishable by being bled dry by Booya Bob.

  62. SAS says:

    How long do you think before these Home Builders really undercut the Joe 6 pack seller?


  63. SAS says:

    btw– Crude at 55 is by no means a collapse..as how the media is currently spinning this…

    amazing, the powers that be already have Joe 6 pack thinking that 55 crude is “low”.

    man alive,

  64. Al says:

    RealtyTrac has come out with their October 2006 numbers and the results are in. Colorado leads the way with once out of 337 homes in foreclosure. Vermont had the least amount of foreclosures in the country with only one home in forclosure.
    The percentages are the change from October of 2005.
    Top 10 States with Homes in Foreclosure October 2006
    1 Colorado 1 out of 337 homes (117 % increase)
    2 Nevada 1 out of 389 homes (557 % increase)
    3 Georgia 1 out of 449 homes (99 % increase)
    4 Michigan 1 out of 623 homes (88 % increase)
    5 Illinois 1 out of 632 homes (144 % increase)
    6 Florida 1 out of 640 homes (49 % increase)
    7 Ohio 1 out of 654 homes (55 % increase)
    8 Tennessee 1 out of 668 homes ( 99 % increase)
    9 New Jersey 1 out of 675 homes (37 % decrease)
    10 Utah 1 out of 718 homes (13 % increase)

  65. Jay says:

    6 Florida 1 out of 640 homes (49 % increase)
    9 New Jersey 1 out of 675 homes (37 % decrease)

    Surprisingly NJ’s foreclosure rate is not much less then Florida.

  66. SAS says:

    -Ohio, Michigan, Georgia, and Tenn I blame for job losses…not RE bubble (thanks be to your friends in China).

    -Colorado, no surprize, for as much as I love that place, people their are pretty naive.

    -Utah, that would be all the Mexicans

    -Illinois, could that be lob loss as well?

    as for NJ, I wonder what county has the largest foreclosures? Shall I take a guess?


  67. Lindsey says:

    I’m reaching all the way back to post 4 for this, so I apologize if it was addressed down in the thread.

    Twice Shy,

    Last week Ara Hovnanian, while on a stage at a conference with Robert Toll, said something about builders dropping houses on land to get some money out of the investment. If this is going on (and it probably is) the most likely place for builders to do it is the North East.

    First, land costs here are relatively high, with only certain areas of California and property in and around desirable cities like Boston, NY, Chicago, and LA being comparable. So builder’s would have a relatively large investment in the land here as opposed to say, Arizona or Georgia.

    Second, since prices here are so out of whack and there is relatively little new construction, the NE presents the best chance to turn a profit from both a current price and available supply perspective (if we’re only talking about new housing).

  68. Al says:

    Utah – all the young people with 2+ kids at 21 years old. They feel enourmous pressure to buy a house. mexicans – not that many in Utah as in Colorado. Colorado – nice state but no Jobs… there was a huge housing boom – a lot of jobs in housing and so on (kind of self-feeding frenzy)- also highest in a country vacancy rate for rentals in Denver.

    Funny that NJ is almost the same as Florida – Flippers capital of the world…

    (But I guess Las Vegas beat Florida by a mile and 1/2 – also no jobs exept in casinos and how many people can work there. Ahh wait all those people handiling flyers on the Strip must make a fortune …)

  69. Pat says:

    SAS.. I saw the statistics for NJ recently, and the foreclosures seemed to be south.

  70. Clotpoll says:

    Nobody here should quit their day jobs. Not seeing Buffett-like market acuity in any previous posts.

    I’ve pleaded in other threads for someone to counter my argument that commercial RE and commercial RE construction has picked up a lot of the slack left by the residential RE downturn. Plenty of hard evidence to back that up…is there a complete disconnect between commercial and residential RE? Or does commercial’s relative health throw a wrench in your doomsday scenario?

    To Al (from #58)- the stock market is finally waking from a multiple compression that’s akin to the 1950’s. There’s a long way for it to run before we get anywhere near fair value. Not to be a tout (usual disclaimers apply), but top-notch commercial REITs like Vornado (VNO) and Boston Properties (BXP) are just monster performers by any metric you care to use.

    Lastly, still no comebacks on why KB Home’s former CEO decided to backdate himself so deep into the money with those options. Not the actions of a man who thinks his business is tanking, is it?

  71. Clotpoll says:

    Thanks, Pat–

    Nice article from Investors.com. However, don’t think you’re going to run into the guys from Lennar (LEN) selling pencils on the sidewalk anytime soon.

    They’re doing the whole new stadium and surrounding residential/commercial mix for the San Francisco 49ers move.

    All the best builders out there are deep into European models, infill, renovations near transit centers and other next generation-type projects. Short them at your peril!

  72. scribe says:


    What do you mean, “European models”?

  73. Lindsey says:


    the reason Commercial Real Estate can’t mitigate the fall of Residential is that it is dwarfed by Residential. A 50 percent increase in commercial development is about 10 percent of the residential market if my recollection serves, so even gangbusters in CR doesn’t mean a whole lot with falling RR.

    All the liquidity sloshing around in the system is probably playing a role in the CR boom by the way. With money so cheap, people see opportunity, but the market may not treat them kindly either.

  74. Al says:

    To Al (from #58)- the stock market is finally waking from a multiple compression that’s akin to the 1950’s. There’s a long way for it to run before we get anywhere near fair value. Not to be a tout (usual disclaimers apply), but top-notch commercial REITs like Vornado (VNO) and Boston Properties (BXP) are just monster performers by any metric you care to use.

    Wait, so traiding company sock at x60 earning is ok??? I am better off with 5.7% CD’s ….

    If you are saying that US market in way undervalued – you are saying that dollar is worth nothing – one more argument towards inflation….

  75. Stan says:

    I didn’t understand why Hovonian’s statement was considered outrageous by Toll. Isn’t it a homebuilder’s business to build homes on land and sell it? Why would they be expected to sit on a depreciated asset if they could sell it by engaging in their primary business?

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