Rantings and tirades of a frustrated economist.
It does look ominous....HOWEVER - This real estate market is an anomaly... Never have we had a real estate market take this kind of "nose dive" with all economic indicators roaring i.e. low unemployment, low 30 yr fixed rates, low prime rate... etc.The previous recessions preceded by sharp dive in housing starts have been because of other forces such as high interest rates or high unemployment. This “nose dive” is more a “perceived” dive. It is real, but it has been spurred on because of overzealous speculative investors driving values too high which stalled the market out. This was then COMPOUNDED by the media screaming “Housing Bubble We are all going to DIE!!! …because of Bush, Haliburtan, and WalMart…. …rather than a rational presentation of the facts.. Can you find a chart to verify that (the anomaly, not my editorial), and I think you will satisfy why your gut is telling you no...
I agree with anon - in previous decades the housing starts surely were more tied in to natural economic health (or lack thereof). The current downward trend is seems to be more indicative of 'irrational over exuberance' finally becoming more rational. I have no proof either - just the old gut telling me.And as a side note: note the long downward trend, which took place during the Reagan/Bush Sr. 80s. No recession took place until well into this trend. If drops in housing starts are a precursor to recession, then their predictive powers for when the recession will happen leave a lot to be desired.
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