Home construction lowest since 1971.

Discussion in 'Economy' started by iamwhatiseem, Aug 18, 2011.

  1. iamwhatiseem
    Offline

    iamwhatiseem Gold Member

    Joined:
    Aug 19, 2010
    Messages:
    14,833
    Thanks Received:
    3,114
    Trophy Points:
    280
    Location:
    Virginia
    Ratings:
    +6,128
  2. American Horse
    Offline

    American Horse AKA "Mustang"

    Joined:
    Jan 23, 2009
    Messages:
    5,741
    Thanks Received:
    892
    Trophy Points:
    153
    Location:
    The Hoosier Heartland
    Ratings:
    +938
    In 1971 mortgagge rates were less that 7.5% and were a good seven years away from breaking double digits. The rising level of interests rates in the 70's did not slow building and house sales, as a matter of fact, being a builder since 1969, it appeared to me each increase in interest rates produced activity, because the trend was up and everyone wanted to get something while they could still afford it, not believing they would come down very soon.

    Today the interest paid annually for mortgage loans is small compared to the principle. Back when interest rates were above 10, in the 12-13 percent range the interest was larger compared to the principle, and could actually make purchasing a home unrealistic because the average monthly payment was more than three times higher than today. It was then that variable rates were created. We also did a lot of land/real estate contracts, with rates down about 8 pct. for the buyer. That wasn't great but it could get you out of a bind.

    That said, it's not a sure thing that higher interest rates today would hurt the building business, or the existing home market. Builders with a novel idea for something that doesn't already exist will still build it "for the market" as a speculative venture. A lot of the present unsold inventory of homes is not wanted by anybody.
     
    Last edited: Aug 18, 2011
  3. Truthmatters
    Offline

    Truthmatters BANNED

    Joined:
    May 10, 2007
    Messages:
    80,182
    Thanks Received:
    2,223
    Trophy Points:
    0
    Ratings:
    +2,233
    housing glut.

    We built too many housing units in the 2000s
     
  4. ShackledNation
    Offline

    ShackledNation Libertarian

    Joined:
    Jun 16, 2011
    Messages:
    1,885
    Thanks Received:
    208
    Trophy Points:
    130
    Location:
    California
    Ratings:
    +324
    The reason there is less construction now is because there was too much construction over the past few decades. This malinvestment of resources into construction, of course, was caused by the creation of money by the Federal Reserve, the manipulation of interest rates, government policy encouraging easy lending and the "everyone must buy a home" campaign.

    Government interference caused an unsustainable market, leading to waste now. People who were probably not the best at constructing homes were pulled in during the boom period, and some who were good at constructing homes have been laid off in the correction period. Government causes much displacement in the labor force, leading to future unemployment due to past malemployment.
     
  5. Trajan
    Offline

    Trajan conscientia mille testes

    Joined:
    Jun 17, 2010
    Messages:
    29,048
    Thanks Received:
    4,751
    Trophy Points:
    48
    Location:
    The Bay Area Soviet
    Ratings:
    +4,756
    the market is being held up like a punch drunk fighter and the gov. won't let his manager or the ref call the fight becasue the guy is knocked senseless, they keep shoving him back out there...
     
  6. boedicca
    Offline

    boedicca Uppity Water Nymph Supporting Member

    Joined:
    Feb 12, 2007
    Messages:
    41,837
    Thanks Received:
    12,787
    Trophy Points:
    2,250
    Location:
    The Land of Funk
    Ratings:
    +22,866
    What do you expect. The Government basically did a Gigantic Housing Version of "Cash For Clunkers" by pulling forward decades of housing demand. Now, there are tons of vacant units in places where there is not demand.

    Thanks Goverment!
     
    • Thank You! Thank You! x 1
  7. Trajan
    Offline

    Trajan conscientia mille testes

    Joined:
    Jun 17, 2010
    Messages:
    29,048
    Thanks Received:
    4,751
    Trophy Points:
    48
    Location:
    The Bay Area Soviet
    Ratings:
    +4,756
    wait, IF they allow F&F to start putting section 8 or folks that have been foreclosed upon already in their properties, it will be scorched earth.
     
  8. waltky
    Online

    waltky Wise ol' monkey Supporting Member

    Joined:
    Feb 6, 2011
    Messages:
    20,896
    Thanks Received:
    1,792
    Trophy Points:
    215
    Location:
    Okolona, KY
    Ratings:
    +3,887
    But if dey speed it up, won't it depress homes prices further?...
    :eusa_eh:
    How to rescue the housing market: Foreclosures!
    August 31, 2011: If the Obama administration really wants to save the housing market, it should speed up the foreclosure process -- not prolong the inevitable, experts say.
     
  9. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,618
    Yes, it is, I agree.

    FYI recently read that Maine has the distinction of having the most houses sitting empty in America.

    23% of all housing stock in this state is EMPTY.

    Now some of that is undoubtably housing that the wealthy own and, for emotional and personal reasons, they cannot stand to part with it.

    But much of it is also just houses that formerly middle class people can no longer afford to keep going. IN a lot of cases these houses are fiully paid off but the maintance is just so high that the families are fleeing to warmer climes where there might be more work.

    The price of oil is killing the middle class family, folks.
     
    Last edited: Aug 31, 2011
  10. Truthmatters
    Offline

    Truthmatters BANNED

    Joined:
    May 10, 2007
    Messages:
    80,182
    Thanks Received:
    2,223
    Trophy Points:
    0
    Ratings:
    +2,233
    Yes thanks republican government.

    They are always saying government cant do anything right then they get elected and prove it.
     

Share This Page