Wow! Isn't that great! Housing starts were higher than economists expected.
Let me put this into perspective for you.
See that little blip that I highlighted in the red circle? Yeah, that liiiiiiittle, teeny weenie, blip. Yeah, the one that looks like all the other minor blips before it? Yeah, that's what people are all getting excited about.
Let me explain something to the idiots on Wall Street who, despite their Ivy League degrees and cash from their mommy and daddies, are still idiots.
THE HOUSING MARKET IS STILL OVER SUPPLIED WITH HOUSING.
Now I know Minneapolis isn't the same as the nation, but I gander it's roughly the same. Months supply of housing is at 7 months. This is 2 months HIGHER than what is deemed to be balanced. The market is STILL OVERSUPPLIED.
And now builders are going to BUILD MORE OF IT????
Now, let's put on our economic thinking caps, and try really really hard and ask ourselves what we learned at Harvard's economics 101 class about supply and its affect on prices. If supply goes up, then PRICES GO DOWN. And this is just housing starts, doesn't even include all the foreclosures now hitting the market, let alone the phantom inventory of homes that once there's a hint of prices recovering will flood the market keeping prices low for a long time.
Additionally, let me tell you something about real estate developers and home builders. The dirty little secret is they're not economists. They're actually galactically retarded when it comes to economics. They never looked at supply figures before hand and they certainly aren't looking at them now. They're making the same mistake they made back in 2007 and flooding an already flooded market with more housing. The reason they do this is because developers are in it for the same thing bankers are;
The size of the deal and bragging rights, not profit.
They have no real skill or trade outside home building and with their egos inflated during the housing boom, why they have to keep up their faux "multi-million dollar real estate developer" image and therefore are itching to start the latest multi-million dollar development just to save their bloated egos (even though it will be guaranteed to lose money). The "City Center" project in Las Vegas is a perfect example of just what idiotic egomanics these schmucks are.
And the stock market so optimistically shooting up on this paltry and pathetic data is just proof how addicted, desirous, if not demanding the market has become of inflating asset prices and asset bubbles instead of solid economic growth and corporate earnings.
6 comments:
Nice result from the Obama "save the over-indebted"-policies. The economy is moving backwards towards more problems. At least housing will be cheap eh?
If I traded US stocks I would start looking to short-sell building contractors right before the market realizes that "uh-oh", now we have a supply covering not only 2 years of sales, but 5....
I agree there a lot of stupid builders, developers and bankers adding to inventory in the wrong areaas.
I will also add that there are price brackets and areas that are under supplied with housing.
During the boom the larger homes were over built, but nothing was built in the lower to mid price ranges.
Isn't housing starts good news because it will employ all those carpenters, rockers, plumbers, and electricians that are otherwise roaming the streets eating brains?
Actually, at least in my area, we have a shortage of construction workers, and the "shovel ready stimulus projects" are only going to increase that shortage. Which will result in a rapid increase in wage rates. Which will probably never come back down. Which means that when I need work on my house, it will now cost me even more.
Hmmm Minnesota is not even a hot spot of oversupply, if what I've been reading is right you guy are at the normal end of things/
CA, NM, FL, NV and MI are the top five by a huge margin.
It takes months to process permits, get loans & investments, design, and build condos and homes. So it'll take a while for them to realize the obvious.
Do builders just go and build a whole lot of houses on spec in the middle of the biggest economic downturn in recent memory? Who's fronting the cash for that? I thought credit was tough to come by.
There must be some reason for this other than "builders are idiots". Maybe folks who feel financially secure see this as a good time to build - how much lower can that housing starts number go? It's way below anything previous on the graph.
Or maybe it's a 'dead cat bounce'?
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