Referring to a recent study that housing start numbers are showing growth:
Where did this increase in housing production come from? Was it “stimulated” by the tax credit? Was it “stimulated” by low mortgage rates? What about foreclosures? What about the Census Bureau’s release on the 20th that the June housing starts were 5.8% below June of 2009? And, then, yesterday, the WSJ comes out with news that “The Housing Market Stumbles”. What is going on with the housing market and what does it mean to the economy?
Read more from Housing Market Growing in Spite of Economy.
The increase that is the focus of the the Metrostudy report is small, just 2.1% over 2Q09.
Since 4Q09, only one state (Illinois) of the 19 states covered by our research experienced a decline in housing production. The rest of the states, representing about 65% of the national housing market, found it necessary to increase local single family detached housing production.
At this point, condos and large multi-family inventories appear to pose the largest threat. You might be tired of hearing, but their study shows that area like Las Vegas continue to be poster children for the housing boom where the report an 18 month supply of finished, vacant homes for sale. The catch is condos. If you remove the vacant condos, there is only a 2.4 month supply of single family detached housing, a very healthy number.
I put a lot of stock in what Metrostudy says because they log thousands of miles driving local markets all over the country, review thousands of subdivisions and lot sales to keep developers and banks informed. Their website states the Raleigh – Durham Market Metrostudy Office logs over 7,000 miles and 1,300 subdivisions every year.
The argument at the end where construction will save the day is a little weak, though. On a broader scale, we are a consumer based economy and when we start working, we will start buying and that goes beyond housing. I think that too many news outlets discount what can happen as the government actually pays out the billions it offered in housing tax credit incentives.
You can follow Metrostudy’s news reports for the Raleigh area on their website at Raleigh – Durham Market.
If you want to review the census data that is reported then visit them on line at New Residential Construction.