No New Homes

From HousingWire:

Economists: Housing inventory could soon turn into an emergency

The latest report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau showed housing starts sank to an eight-month low.

Now, economists are saying that drop could intensify in the months ahead as building permits also saw a drop in May.

“Housing shortages look to intensify and may well turn into a housing emergency if the discrepancy between housing demand and housing supply widens further,” said Lawrence Yun, National Association of Realtors chief economist. “The falling housing starts and housing permits in May are befuddling given the lack of homes for sale and the quick pace of selling a newly-constructed homes.”

“Meanwhile, job creations of a consistent 2 million a year will push up housing demand further,” Yun said. “One thing that’s moving up is the housing costs for consumers: higher home prices and higher rents.”

And NAR wasn’t the only one alarmed by the survey’s results – another expert explained the importance of watching the market to see if the decrease is a new trend.

“We will need to watch carefully if this is a one-time anomaly or a multi-month trend,” said Scott Volling, PwC U.S. Engineering and Construction advisory director. “The industry is already facing an inventory shortage, which is driving up prices, so these results indicate the demand-supply gap could get worse and further impact affordability for certain segments and markets.”

One economist, who served as chief economist at Fannie Mae for more than 20 years, said the drop was surprising, and that the industry expected a modest increase of about 1.2 million units.

“The decline in starts is all the more surprising given high levels of homebuilder confidence and increases in new home sales, although there was a sharp drop in April,” Nationwide Chief Economist David Berson said. “Additionally, mortgage rates remain very low and mortgage credit availability, while much tighter than in last decade’s housing boom, has eased considerably in recent years.”

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25 Responses to No New Homes

  1. grim says:

    From Curbed:

    U.S. housing market bouncing back, but not for all, says Harvard report

    Surveying the state of the U.S. housing market in 2017, it’s hard to not come away with the impression that there are two markets. One, mostly coastal and urban, is seeing skyrocketing prices, tight inventory, and high demand. The other, also urban but increasingly suburban and rural, faces steep affordability problems, decreasing homeownership, and in extreme cases, a rise in concentrated poverty.

    The State of the Nation’s Housing 2017, the annual report from the Joint Center for Housing Studies of Harvard University, does make it clear that the nation’s housing market has, in many ways, bounced back from the massive impact of the Great Recession. Showing signs of health and increasing value, the revitalized market and recent upswing have been welcome news for the millions of homeowners who saw the value of their homes plummet. But along with signs of optimism, there’s still severe challenges to provide enough affordable rental units while offering more Americans a road to homeownership.

    The report suggests that, to meet the demand of adequate shelter for all Americans, the country need “a renewed national commitment to expand the range of housing options available for an increasingly diverse society.” Here are some of the highlights of the newly released report.

    As many millennials and middle-class families can attest to, the path to homeownership is increasingly challenging, especially in booming urban markets. Consider the wide gulf in average prices: Home values now average $575,000 in the 10 fastest-growing metro markets, which is more than four times the $135,000 average in the 10 areas with the lowest appreciation rates. On average, 45 percent of renters in metro areas can afford monthly payments on a median-priced home in their market, but that shares drops to less than 10 percent in the high-cost markets in California, the Pacific Northwest, Florida, and the Northeast.

  2. yome says:

    Rising interest rates will make current homeowners with 3 handle rates stay where they are. I am paying $500 a month on interest on my $1,750 mortgage. $1,200 goes to principal. Can’t beat $500 a month on a 3BR house, compared to a $1,600 1BR apartment.

  3. The Great Pumpkin says:

    This is going to be a huge problem or should I say that it already is.

    “At the moment, staffing problems are worst in rural and urban school districts, especially in low-income communities. However, administrators across Michigan say they’re struggling to find qualified people to fill various teaching positions, particularly at the secondary level.

    Norway-Vulcan Area Schools Superintendent Lou Steigerwald worries that shortages will soon become acute as the current crop of baby boomers retire from his western Upper Peninsula district, and he’s not alone in worrying.

    In a survey he conducted of 40 UP superintendents, 65 percent expected to replace between 6 and 20 percent of staff in the next five years—with 25 percent anticipating higher than 20 percent turnover. Most expressed “no confidence” they will find highly qualified replacements.

    Already, postings for the most hard-to-fill positions—such as special education jobs—sometimes draw zero applicants in UP districts, Steigerwald said. Students in those classes are taught by less qualified long-term substitutes or sit at computers taking online quizzes over content.

    “This was foreseeable,” Steigerwald said. “I talked with our (state) representative as long as three or four years ago, and I told him, ‘We’re going to have a problem up here if we don’t take a look at what is happening in the state.’”

    The biggest issue in Steigerwald’s view: Inadequate state funding for education has led to stagnant wages—which amounts to falling pay when rising costs of living are factored in. Why would debt-ridden college graduates consider teaching as a career?”

  4. The Great Pumpkin says:

    The shortage in skilled construction labor will prob be even worse than teachers. Going to be tough to find skilled plumbers and the like very shortly. Sure they will put in hacks to fill the position, but the skilled will be far and few between. Already know of guys that gave up hiring workers, and instead do it themselves to save a headache.

  5. The Great Pumpkin says:

    And damn it, this low inventory is going to blow this bubble up to epic proportions. Might raise prices too fast and ruin this economic boom. Prices go too high, too fast, it will eliminate economic activity, hence, destroying economic growth with the limited economic activity. We want to see lots of transactions, not a limited amount.

  6. The Great Pumpkin says:

    Wow, this guy gets it. Wish more could understand this.

    “In the transcript of Hanauer’s extended conversation with Paul below, the billionaire explains how we’ve misunderstood prosperity and capitalism and why the rich are reluctant to see that change.”

  7. The Great Pumpkin says:

    He gets it!

    “So what is ‘middle-out’ economics?

    So middle out economics is essentially a 21st century way of understanding how an economy works – not as this linear mechanistic system — but as an ecosystem, with the same kinds of feedback loops. The fundamental law of capitalism is if workers don’t have any money, businesses don’t have any customers; that prosperity in a capitalist economy is a consequence of a circle of feedback loops between customers and businesses, which means that a thriving middle class isn’t a consequence of prosperity. A thriving middle class is the source of prosperity in capitalist economies, which is why a policy focused on the middle class is and has always been the thing that drives prosperity and growth — not pouring money into rich people, which simply makes rich people richer.

    And so middle-out economics is the idea that if you make a policy focused on the middle class and generate demand from the middle class, you’ll both create more entrepreneurs to drive innovation, and essentially, a sale cycle and a hiring cycle for business that generates a virtuous cycle of increasing returns that benefits everybody.”

  8. The Great Pumpkin says:

    “But trickledown economics is true, to some extent, right? I mean, rich people get money and then they’ve got to either spend it or, ultimately like Warren Buffett or Bill Gates here in Seattle, give it away.

    Yeah. So it is true that rich people can spend more money than middle class people, but there’s this upper limit on what we can spend. I drive a very nice car, but it’s only one car. I don’t own a thousand, even though I earn a thousand times the median wage. I have a few jackets, not a few thousand. My family can afford to go out to eat more than most American families, but not more than three times a day. We can’t go out 3,000 times a day.

    So if you concentrate wealth in the hands of a very few people, you break down this feedback loop between customers and businesses. My family, among other businesses, owns a pillow company, and the pillow business is tough because fewer and fewer people can afford to buy pillows. Again, I may earn a thousand times the median wage, but I don’t sleep on a thousand pillows.

    You need everyone to be able to afford a pillow every year in order to have a successful pillow business, and concentrating wealth at the top essentially creates a death spiral of falling demand.

    The thing about a real economy is that it actually is like the game of Monopoly in the sense that when one person has all the money, the game is over. And in a game of Monopoly, of course, that’s quite charming, but in a real economy it’s much more problematic.”

  9. yome says:

    Why is salary not going up to attract skilled labor,if there is a shortage? Does not make sense on complaining about not finding people with proper skills and yet nothing is being done to attract the people with skills to work for the company. An example is Nurses. No Americans want to become a Nurse years ago. They had to get Nurses from other Countries to work for Hospitals due to the shortage. Salaries kept on rising until Americans realized Salaries are very high , benefits and work hours is good for people with Children.3 days work,4 days off. And this is full time. Today,the US do not need foreign Nurses anymore.
    My wife’s last paycheck ; Contribution($491),Matching($113) on her 401K. That is 23% matching.

  10. The Great Pumpkin says:

    Powerful words. He understands what I have been trying to say on this blog for years. These aren’t my words, but a billionaire’s. I was accused of trying to put my hand in others pockets, is that what this billionaire is suggesting? Or is he advocating for a stronger economy? This is why the pumpkin constantly rails about the dangers of income inequality. It’s no good for anyone, esp future economic growth.

    “You need everyone to be able to afford a pillow every year in order to have a successful pillow business, and concentrating wealth at the top essentially creates a death spiral of falling demand.

    The thing about a real economy is that it actually is like the game of Monopoly in the sense that when one person has all the money, the game is over. And in a game of Monopoly, of course, that’s quite charming, but in a real economy it’s much more problematic.””

  11. The Great Pumpkin says:

    Impact of income inequality. Slowly disrupts and destroys the economy. Keeping wages in check is needed, but holding them down for years is destructive to the economy and that’s exactly what we have done, and are only now starting to slowly fix.

    “Why is salary not going up to attract skilled labor,if there is a shortage? Does not make sense on complaining about not finding people with proper skills and yet nothing is being done to attract the people with skills to work for the company”

  12. The Great Pumpkin says:

    Raises are not a bad thing if not taken to the extreme. Raises provide the “food” for strong future economic growth. You can’t overfeed by giving too high of a raise, but you can’t starve the economy like we have been doing for years and expect strong economy growth. You are starving the economy with no raises and offshoring good jobs. It’s utterly destructive to future growth and it makes me sick that the elite have done this in the name of “short term gains” at the expense of future growth. These people should be hung for what they have done.

  13. The Great Pumpkin says:

    Sorry about all the posts, but very passionate about this issue.

  14. The Great Pumpkin says:

    Why is this so hard to understand?

    “But the problem is we have structured our economy in this sort of death spirally way, where huge profitable organizations like Wal-Mart pay poverty wages to a million workers, and then taxpayers make up the difference in social services programs like food stamps and Medicaid and rent assistance, and so on and so forth. It’s as morally repugnant as it is economically inefficient.

    It’s a fact that Wal-Mart earned $27 billion in profit last year. They could afford to pay their bottom million workers $10,000 more a year, raise all of those people out of poverty, save tax payers billions of dollars, and still earn $17 billion in profit, right.

    It’s simply nuts that we have allowed this to happen. And the only way you can change things is to raise the minimum wage. Certainly the people that run Wal-Mart will not do this on their own.

    The idea that businesses will go out of business if they pay workers more is just not true, even though I understand the sort of visceral fear that some of them feel about this change.”

  15. yome says:

    Businesses wants to pay skilled labor the amount they will pay skilled labor in a developing Country. It is not about mis-match on skills. Skills gets paid by the experience and demand. So far,salaries do not match demand

  16. No One says:

    What is it about supply and demand that’s so hard for you to understand?
    Wishing cannot make semi-skilled labor worth $60k/yr. Nor can govt or unions. Asking companies to pay $15/hr for an activity that generates $10/hr of revenue is idiotic. Its like wishing someone will pay you $300k more for your house than it’s worth.

  17. LL says:

    buy local

    The Moonachie, New Jersey-based Swintec appears to be one of the world’s last typewriter makers, selling translucent electronic machines largely to jails and prisons.

  18. The Original NJ ExPat says:

    typical Sunday, Pumpkin pus everywhere.

  19. The Great Pumpkin says:

    No one, this is where you are wrong. You are not looking at the economy from the viewpoint of an ecosystem. You instead look at it from the view of an owner. The biases of an owner do not allow you to view the economy in the same light as myself. You are incapable of understanding my thought process because of this bias. What you don’t understand is that there is plenty of slack in the profit department to pay these workers more and still be highly profitable. Why? Because all of the productive gains in the economy have gone to profit over the past 30 years as opposed to the healthy way, which is to share this growth with labor which is your customer. This is what is causing income inequality and it needs to be (it will be) fixed. You want real growth, then you need a healthy ecosystem. A healthy ecosystem is one in which the govt doesn’t have to subsidize the cost of artificially low compensation for Walmart workers( our nation’s largest employer). A healthy ecosystem is one which puts enough capital in consumer hands (aka workers)where they don’t have to go into debt to supplement current economic growth. That’s what happened. They didn’t give raises, wages stagnated, and the consumer had to debt binge to keep the economy going. Not cool.

  20. The Great Pumpkin says:

    “If power were a prescr!ption drug, it would come with a long list of known side effects. It can intoxicate. It can corrupt. It can even make Henry K!ssinger believe that he’s sexually magnetic. But can it cause brain damage?”

  21. The Great Pumpkin says:

    People like this (Alex jones) have hijacked the Republican Party. Can’t believe trump follows this loser. Check this quote to see how dangerous this is. There are idiots out there that actually believe this crap and act on it like this woman.

    “The segment goes on to explain that earlier this month, a Florida woman was sentenced to five months in prison for sending death threats to the parent of a 6-year-old who died in the Sandy Hook massacre. “Her defense attorney said she was primarily motivated by Infowars,” Kelly said.”

  22. The Great Pumpkin says:

    “Mike Pence is charging $100,000 to the citizens of Indiana to make up for his Clintonesque email problems. Yes, the vice president himself, who stood right behind Trump at the “lock her up” rallies, is being forced to submit to over 50 records requests for government-related emails that he sent over his private server. And, like the Clinton case, Pence’s emails were apparently hacked into sometime before he joined Trump’s campaign. So, Pence is spending the state of Indiana’s money to hire lawyers to sort through all his mishandled communications. But don’t worry, a Pence spokesman has assured us there’s no hypocrisy issue here, as Pence didn’t hold an important position like Secretary of State at the time, merely Governor of Indiana.”

  23. Pretty nice post. I just stumbled upon your blog and wanted to say that I’ve truly enjoyed surfing around your blog posts. After all I’ll be subscribing to your rss feed and I hope you write again soon!

  24. Anon E. Moose, Ghost of JJ says:

    15 of 24 Comments from the Gourd; many 3-4 in a row. Have you ever thought of just getting your own blog? Or are you afraid no one will visit?

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