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  • georg_washingtn georg_washingtn Jun 30, 2010 3:48 PM Flag

    U.S. May Face Housing Shortage in 2011

    U.S. May Face Housing Shortage in 2011
    Economist Says, Foreclosures Notwithstanding, Housing Inventory Isn't Keeping Up With Population Growth

    46 comments By Alexandra Zendrian,
    Feb. 20, 2010
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    Home sales figures for June did far better than economists had expected.The focus of the U.S. real estate market lately has been the number of foreclosures and people trying to purchase cheap housing. But Brian Wesbury, chief economist at First Trust Advisors, says that if Americans don't start focusing on building new houses, the market will have a much bigger problem on its hands.

    "We need one and a half million houses per year just to keep up with population growth," Wesbury said in an interview with Steve Forbes. "And then if you throw in, you know, fires and tear-downs and just worn-out properties, we need 1.6 million or more per year. Right now, we're down to about six and a half, seven months' inventory whether you look at new homes or existing homes."

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    WATCH: Get Back into the Real Estate Game Privately owned housing starts in December 2009 were at a seasonally adjusted annual rate of 557,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4% less than where it was in November, which had 580,000 housing starts.

    Housing completion numbers also contribute to this dire picture, with December 2009 privately owned housing completions reaching a 768,000 seasonally adjusted annualized rate. That's down 11.2% from the 865,000 completions in November and down 25.3% from the 1,028,000 completions in December 2008.

    Some people might shrug these statistics off considering the number of foreclosures in the market. To them, Wesbury told Steve Forbes, "Yes there's foreclosures coming into the market, but we're only starting right now ... We're starting one-third of the houses we need just to keep up with population growth, and that can't last."

    There were 315,716 properties last month with foreclosure filings according to RealtyTrac. These filings include default notices, scheduled auctions and bank repossessions. Though last month's filings were 15% more than a year ago, it was 10% less than December's.

    Aspiriant Chief Investment Officer Jason Thomas doesn't see the foreclosure situation getting better until the labor market picks up. "So many people are getting to a point where they just can't hold on anymore and we may see another wave of that if we don't see a pretty robust turnaround in the labor market," he says.

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    • Is the correlation still Iphones? I thought it was now #Ipads sold / listings x Toyota recalls + the number of barrels spilled by BP!

    • you know, I haven't seen anyone address the homes that are being distroyed annually in this arguement

      I don't have a solid number on this

      however, our city has been tearing down homes at a rate of 300 per year for as long as I've been here

      one of the stimulus grants that our city got would tear down another 200, while allowing the city to buy, rehab and resell a bunch of hud homes

      this wasn't only awarded to our city

      in addition, we've had a record number of house fires in vacant houses this year, which the fire dept has said in the news that these are nearly impossible to pin on anyone since the evidence goes up in the fire

      there are also a good number of people in town who suspect that many of those fires are set by the city itself

      and I'm hearing of more than normal numbers of fires in other areas as well

      all told, about 700 houses removed from inventory in our city in one year

      times the 800+ cities across the country (ours being considered a "mid sized city", so if all things are proportionate, then we're talking roughly 600,000 homes removed from inventory this year

      true, a lot of these homes are hardly competing for toll bro's customers

      however, the majority of permits issued in our area this year were to gubmint sponsored builders who are building large numbers of infill houses with prices of $150k or so

      to me, this looks like the gubmint is trying to zero out the net number of homes added this year

      please note, I don't care to skew the data to fit the long or short arguement, but rather to see the true course of the housing industry

      I'll go with my gut feeling that we're about to see the final wash out in builder's share prices, then cleared for take off

      • 2 Replies to primemeridian
      • When the 2010 Census numbers come out early next year, they will cast some light on number of housing units by area.

      • Prime-- HA HA! That is absolutely absurd. Talk about a conspiracy theorist!

        First, I have not seen these types of fires in my area EVER and I doubt it is happening anywhere else outside your trailer park.

        Second, the only type of fire we regularly have here are the Jewish Lightening kind, when the homeowner wants to collect insurance money and/or their home value has dropped to their cost.

        Third, when and if these fires occur, they occur in economically devastated regions (aka Ghettos) such as Detroit to homes that are already abandoned/vacant/condemned. When the town finally receives the grant money from the county which receives it from the state which receives it from the "gubmint" they end up building cold water flats if anything.

        Fourth, this will in no way impact sales of the Toll House Cookie Cutter builders. Fifth, in some areas of the country (AZ, FL, NV, CA) where these home builders got (far) ahead of themselves and built new communities, the homes are left to rot until the town takes action and bulldozes them-- no need for a mystery fire before they condemn the building. I saw one new community of 30-40 partially finished homes bulldozed. Its as simple as that, no remorse.

        Fifth, gen Y is either moving in with their parents (such as my eldest son) temporarily, by which time they are ready to move out (once again), the elderly will have become the deceased, leaving millions of homes available, or gen Y plans to rent indefinitely. Either scenario is not bullish for any home builder, cookie cutter or otherwise. Give them 15 years.

    • Those anal-cysts work for Obamie. Its about consumer psychology. Get people to think things are great and just maybe they will feel like shopping, buying, selling etc... But reality says otherwise.

      Obamie wants the illegal immigrants legalized because they end up having children here which boost the population growth- he sure as hell knows white folks are too busy actually looking for work or doing work they can't have kids of their own.

      I'm retiring soon and I'll be in south America or Switzerland. BUT OUTTA HERE!

    • Another example--

      A developer in NY recently defaulted on a 50 unit condo complex. The complex was partially completed in 2009 and 4 units were pre-sold. In total, 11 units

    • Shadow inventory is not ghost inventory. Simply put- Shadow inventory is what the banks are holding off the market. Ghost inventory is what the public is holding off the market until any *sign* of a sustained recovery is underway. Both are unknown variables but we can extrapolate the figures from current housing stats. Even the banks are not sure what the final figure will be. The back log of foreclosed homes in states like Florida is 15+ months which happens to be an all time record. Is that a signal things are turning around?

      Unemployment of 16-29 year olds is approaching 25%. The real *U6* unemployment is 18% and climbing with no end in sight. The Fed is giving full gas to the "economic stimulus" and we are not going anywhere. We need jobs. But not service jobs- real manufacturing jobs. We can simply do that with import tariffs but that's a whole 'nuther story.

      Getting back to the data- some "housing experts" equate iPhone sales with home sales. Its absurd and another reason I remain bearish home builders. I'll give you a real example of Main Street vs Wall Street:

      One contractor friend of mine who lives in Bergen county NJ said people can't get OUT fast enough and have stopped "improving" their homes which they have been doing since they realized they can't sell in this market. He did over 60 additions in 2006- last year he did 10 and this year he is on track for 5-7.

      The so called "pent up demand" for housing you bulls like to use, is in effect not actual demand but rather a "shift in demand" as one broker friend told me. Once these imbalances are corrected, watch out. All expected good news is already priced in to these home builders.

      Will the markets recover eventually? Sure, but that will not occur for another 10 years. Look at "underwater" homes as a leading indicator.

    • There will be a shortage of expensive homes next year as the wealthy folks upgrade. Pent-up buying will come into play after 2-3 years of cutting back.

    • Is this from the same individual(s) that said there is no housing bubble, now or ever or that "now is the best time to buy a house" (as quoted 18 months, 12 months, 9 months, 6 months, 3 months and 2 weeks ago LMAO)?

      I look at the fact from Main Street, unlike these "experts" who speculate on made up data. The best is when an "expert" examines data that is dynamic, yet calculate it is as if its fixed data. How does that work? It's like a meteorologist predicting the weather for next month based on historical data from the past century.

      Check lumber as one indicator...

    • If there is an upcoming housing shortage, it will be due to people's inability to afford adequate housing.

    • HAHAHA! Keep dreaming of a shortage.

      Plenty of inventory as the number of people per housing unit increases to 3 same as it was a few decades ago. Also many homedebtor fools will have to rent cuz their credit score is destroyed and they do not have a legitimate down payment. In addition there is a huge shadow inventory as long as the banks are allowed their manipulative pretend and extend phony policy of not foreclosing on freeloaders.

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