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Could The Miserable Housing Starts Be An Indicator Of The Housing Market's Recovery?

Not if you believe everything you read in the press. These writers present only what appears on the surface. Yes, Housing Starts plunged last month. Does this mean the Housing Market is in the toilet?

The government has just released September 2007's Housing Starts data for the country. A "Housing Start" is a new home on which construction has commenced.
= Versus August 2007, starts are down 10.2%
= Versus September 2006, starts are down 30.8%

Headlines are saying that this is bad news for the U.S. economy, proof that real estate is in a tailspin. That the ”nightmare” is ongoing. As usual, the press hasn’t done their homework. If Housing Starts are down, it means that the housing supply will also be down shortly. Add to this scenario, builders who are no longer adding new supply to the housing market, the existing demand for homes are allowed catch up. At this point we see a rebalancing of the Supply and Demand, as home values rise.

The result
= Todays buyers will buy with confidence, realizing the investment value of their purchase.
= As values rise, mortgage lending risks decline and helps more people get approved for more types of mortgages.
= More buyers will be able to get approved for more types of mortgages.
= Rising home values create wealth in the form of home equity. Home prices aren't being supported by the existing demand, which tells us that it's time to cut the supply, and that's what the builders are doing.

So, this is one approach for the media to present a more realistic explanation of what’s current in real estate.

Posted by Robert Kissig on 10/19/2007 10:00 AM

Comments (6)

manhattan beach, hermosa beach, ca, real estate, ca real estate, 2nd homes, time share, retirement

6 Comments on Could The Miserable Housing Starts Be An Indicator Of The Housing Market's Recovery?

Great Post. I think the media loves to scare people. I don't think they would sell as many papers with good stories. It's very sad.

10/19/2007 10:12 AM

by Jeff Kessler ABR,GRI, Texas 512.801.5666 (Keller Williams Realty)

Perspection becomes reality. It's a great time to buy and will probably continue to be a great time to buy for another year. Great post.

10/19/2007 10:17 AM

by Nancy Moeller (RE/MAX Real Estate Services)

The soft market will be around for a while. This took some time to bubble and will take much more time to correct. Jobs and a growing economy will be the thing to watch. If government continues growing then jobs will not follow. Dig a little deeper, this is like an ice berg.

10/19/2007 10:21 AM

by Eric Bouler (Prudential Gardner)

Buffini released some numbers from an economic typ PHD. I don't remember the name or date...sorry. Anyway. depending on the start date in August we were in month 20-22 of the market pullback. The average is 27. Now there is some sunshine ;)

Or as Annie says "the sun will come up tomorrow"

10/19/2007 10:25 AM

by Perrin Cornell, ABR (Windermere RE/NCW)

Well it is good in the sense it is all part of a business cycle. It is easy for a dentist to work on your teeth after you've has your Novocaine! It is only bad news if you are listening to the spinsters! Economics are not pop culture... there persons reporting the news are not economists. Economic data does not lie, it is just how you interpret it. We have some rough times ahead paying for the consequences of last nights excesses, but that is it folks. We are not in free fall without a parachute.

10/19/2007 10:30 AM

by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)

The media might spend some time being thorough. The public and realtors deserves it.

10/19/2007 03:39 PM

by Robert Kissig (Real Estate West)

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