Housing Starts Lowest Since March 2005
April 18, 2006 — Builders started work last month on the smallest number of new houses in a year, as rising mortgage rates and record inventories of unsold homes discouraged new projects. Housing starts declined 7.8 percent in March to an annual rate of 1.96 million, from 2.126 million in February, the Commerce Department said…
April 18, 2006 — Builders started work last month on the smallest number of new houses in a year, as rising mortgage rates and record inventories of unsold homes discouraged new projects. Housing starts declined 7.8 percent in March to an annual rate of 1.96 million, from 2.126 million in February, the Commerce Department said today in Washington. Building permits, a sign of future construction, fell 5.5 percent to an annual rate of 2.059 million from 2.179 million. “It’s clear that the housing market is cooling,” Joel Naroff, president of Naroff Economic Advisors, in Holland, Pennsylvania, said before the report. “There are areas of the country where we are going to see pretty sharp declines in construction and in housing prices.”
U.S. Housing Starts Fall 7.8% in March [Bloomberg]
Yeah, the commissions (rental and sales) are outrageous. I used to be a serial mover back in 2000, before I moved back to nyc. But the 10-15% annual rental commission that the agents were charging in nyc helped me to quickly cure a bad habit. Good thing I’m a cheap-skate. It forced me to take a good, long, hard look at homeownership and I haven’t looked back ever since.
Nowadays, everybody and their mom is a real estate agent. I took the course and got licensed in order to educate myself about the market. But I’ve since let it expire and can’t imagine relying on a sales license for a living. It’s a good time to be an agent (if you’re a good salesperson) but I can see it quickly becoming a very precarious profession over the next few years.
FSBO may be no brainer like doing your own laundry. However, it can be thought of as a luxury (like dropping off your laundry) that some sellers, faced with stagnant price appreciation, can no longer afford if they want to see a profit.
Anon 11.59am, I don’t know. If it was a strong seller’s market, you could say doing a FSBO would be a no brainer too because the property would sell itself and not need the help of a broker. Hard to say. All I know is that when I was looking a few years ago, I scoured everything and did not just rely on brokers. Seemed like everyone else was doing the same thing then too (at least for townhouses). Makes me question the real value of brokers for townhouse sales generally in desirable areas.
I sense more FSBO’s. Seems like a bear indicator as sellers have to get more stingy with their profit margins as opposed to months ago. No?
Anon 11:23 AM, I think that is exactly what’s exciting about living in bklyn today. You never know what’s going to jump off week to week. I live near Myrtle ‘murder’ ave and it’s amazing watching buildings getting torn down, new buildings going up, new restaurants, cafes, stores, etc. opening. It’s continually evolving. Boggles the mind. I constantly have to adjust my thinking/expectations. Just when you thought you saw it all, something else bigger and grander comes along.
I drove along 4th ave also recently and was amazed at all the activity going on near atlantic ave. It seemed as if every block was spoken for.
Will there be a glut eventually. Probably. But the downtown area is getting so ‘beautified’ that I think people will continue to make the move across the bridge(s) for years to come.
“The problem with the late 80’s was that developers kept building more new houses/condos even as the inventory continued to increase. This lead to a glut and an eventual crash in property values.”
But they’ve only fallen 5%, which means they are still building. Just because they’re slowing a bit doesn’t mean they’re stopping, so we could easily see a glut. Plus, it doesn’t account for everything currently under construction and not sold yet, and we all know that there are plenty of buildings out there like this (ie, Toll’s new East Village building). It would seem that at least for this year, inventory is still going to keep rising.
That’s it! Sell, sell, sell….
Thanks for that info anon 09:14 AM. It’s interesting how often these reports tend to lump all real estate together. It’s good to recognize that the market has different stratas (regional, price, house vs. coop vs. condo, 2-bedroom vs 1 bedroom vs studios, etc). Not all sectors are affected similarly. Some sectors continue to experience growth while others decline or stabilize.
I’m actually heartened by the fact that developers seem to be learning their lesson from the late 80’s, early 90’s market crash. They seem to be responsibly adjusting housing starts to compensate for increases in supply.
The problem with the late 80’s was that developers kept building more new houses/condos even as the inventory continued to increase. This lead to a glut and an eventual crash in property values.
I think it will be good to see gradual declines in housing starts. We all know that things can’t continue at the pace they have, if it slows at a reasonable pace it means that the supply coming on line is getting in synch with the demand. What we need to watch for is a sharp drop-off which will signal that the supply has gone too far.
The other interesting point is the multi-family starts were up considerably. Not sure if this includes buildings slated for condos or not but it does show that demand greater then supply in some segments of the market. All the condo conversions are beginning to sqeeze the rental market, manhattan rental prices are up almost 10% over last year.