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Home construction lowest since 1971.

iamwhatiseem

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American Horse

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OK....that's bad...no...that is horrendous.
Forgive me if there is a thread on this...I did search and didn't find one.
Holy Mackeral...when you consider that mortgage rates were pushing double digits in 1971...and mortage rates today are at 4.15????....this is an abyss!

Home construction data show builders stuck in funk | The Argus Leader | argusleader.com

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.
 
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Truthmatters

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housing glut.

We built too many housing units in the 2000s
 

ShackledNation

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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.
 

Trajan

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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...
 

boedicca

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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!
 

Trajan

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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.
 

waltky

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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.
Four years into the housing crisis, the real estate market is still teetering on the edge. The Obama administration has tried one program after another to stem the tide of foreclosures with limited success. And it is continuing to look for ways "to ease the burden on struggling homeowners," though no new initiative is imminent, the White House said this week. But some housing experts argue that the administration should go in a different direction than it has in the past. Instead, they say it's time to focus on pushing many of those delinquent borrowers through the foreclosure process and putting foreclosed properties back into use.

While some of the 2.2 million loans in foreclosure can still be saved, many are too far gone, they say. Some 37% have not made a payment in more than two years, while another 34% have not made a payment in 12 to 23 months, according to Lender Processing Services. "Loans enter into foreclosure, but never come out," said Thomas Lawler, founder of Lawler Economic & Housing Consulting. "If this keeps going on, you have a continual overhang that never goes away."

Delaying foreclosure increases the percentage of homeowners who'll likely never catch up, Lawler said. In 2009, only 6% of delinquent borrowers were more than two years behind. And it means vacant properties still in limbo could fall even further into disrepair, hurting the value of the surrounding housing market. Lawler is not the first to warn about the consequences of slowing the foreclosure process. Since the housing crisis began, several experts cautioned that foreclosure prevention efforts may only prolong the pain.

Accelerating foreclosures is tricky, however, especially since it is largely the purview of the states. But the administration could work with state officials to speed the process, especially on vacant homes, he said. The push would come at a time when many mortgage servicers have slowed foreclosure efforts as they resolve shoddy paperwork practices. Foreclosure filings in July dropped to their lowest level since November 2007, due to processing delays and foreclosure prevention measures, according to RealtyTrac.

Getting rid of the glut
 

editec

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OK....that's bad...no...that is horrendous.
Forgive me if there is a thread on this...I did search and didn't find one.
Holy Mackeral...when you consider that mortgage rates were pushing double digits in 1971...and mortage rates today are at 4.15????....this is an abyss!

Home construction data show builders stuck in funk | The Argus Leader | argusleader.com

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.
 
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Truthmatters

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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!

Yes thanks republican government.

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

waltky

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Housing becomes the economy's silent killer...
:eusa_eh:
Job-creation plan largely ignores housing woes
September 11, 2011, Washington — More than four years after the sector's initial collapse, housing has become the economy's silent killer. But Obama, in unveiling his proposed $447-billion package, said little more on the issue than that he would help 'responsible homeowners' refinance their mortgages.
President Obama's new jobs-creation plan all but ignores what many economists see as the single biggest problem in the stalling economy: the continuing depression in the housing market. Home sales, prices and construction have been bad and have been getting worse for so long that Washington and many Americans have grown numb to the problem. But dig below the surface and housing turns out to be a root cause of many of the other problems that are getting more attention — including the high level of unemployment that Obama focused on in his speech Thursday to Congress. "That's probably the biggest missing ingredient here," economist Mark Zandi said after reviewing Obama's proposed $447-billion package of tax cuts and infrastructure spending.

More than four years after the sector's initial collapse, housing has become the economy's silent killer. With about one-fourth of all houses in the United States in foreclosure or still underwater — their mortgagesexceeding their market price — millions of Americans face such severe financial problems that they cannot begin to resume their normal roles as consumers, move to new jobs or finance their small businesses. Many have little prospect of regaining their lost financial security. The housing bust wiped out more than half the $13.5 trillion that homeowners had in equity in early 2006, according to Federal Reserve data. In addition, the near-halt to construction of new housing has left several million once well-paid workers — many of them with advanced skills and years of experience — either unemployed or just getting by with lower-wage part-time work.

Like the troubled homeowners, most of these workers face long odds against recovering their old middle-class lives unless the industry revives. As for financial institutions, billions of dollars in bad mortgages have become an albatross that undermines lenders' basic soundness and discourages new lending for almost any purpose. Weighed down by steep losses in its home-lending unit, Bank of America is preparing to cut 40,000 or more jobs nationwide. The direct and indirect ties between housing and businesses of almost all kinds are a big reason for the overall lack of economic growth and high unemployment. For makers of building materials, producers of furniture and kitchen appliances and even for grass seed suppliers, the ongoing devastation of the housing market means they also have little reason to invest in expanding operations or hiring new workers.

Coming out of the deep recession of the early 1980s, new-home construction roared back to life — propelling the economy forward and creating 9% of the new jobs in the first year of recovery. This time around, construction accounted for 93% of the net decline in employment. "Housing — it's not the American dream, it's the nightmare," says Karl E. Case, co-founder of the Case-Shiller home-price index. The latest reading of the index, which calculates price changes for the U.S., fell 4.5% in June year-over-year and is down 32% from five years earlier. Some economists and political leaders argue that Americans over-invested in housing and should learn to live with lower levels of homeownership.

MORE
 

waltky

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Mortgage caps may stymie housing market...
:eusa_eh:
The newest threat to home prices
September 19, 2011: The rancorous debate about how to address our escalating national debt has dominated the conversation in Washington lately. What isn't getting much attention inside the Beltway -- but should -- is a looming event that could have major consequences not only for your home's value but also for the overall economic recovery. Barring last-minute action by Congress, upscale housing is about to take another punch to the solar plexus -- just as it's struggling to stabilize.
At issue are the limits for so-called conforming mortgage loans that can be bought or guaranteed by Fannie Mae, Freddie Mac, and the Federal Housing Administration. These mortgages have the implied backing of the U.S. government, which lowers their interest rates and down payment requirements. Back in 2008, at the height of the financial crisis, Congress temporarily hiked the conforming loan limit from $417,000 to $729,750 in affluent areas to boost the flailing housing market.

On Oct. 1, those higher limits are slated to drop back down again in expensive markets nationwide -- ranging anywhere from $483,000 in counties like Monterey, Calif., to $625,500 in cities like New York and Washington. As a result, about 1.4 million homes will be pushed out of eligibility for lower-rate conforming loans, according to the National Association of Home Builders. Homeowners looking to buy or refinance those properties will instead have to take out "jumbo" mortgages," which require a much larger down payment -- generally 20% to 30%, compared with the typical 10% for conforming loans -- and carry interest rates that are typically half to three-quarters of a percentage point higher.

The upshot? More downward pressure on prices in high-end markets. The new loan limits will affect approximately 8% of the total U.S. housing market, according to industry estimates, with particularly significant impact across the Northeast and California, as well as parts of Florida and Illinois. (You can find local market specifics at fhfa.gov.) But everyone should take heed: If expensive homes stop selling, then prices for the houses under them will feel the pressure too.

Indeed, while many experts support the idea of weaning the jumbo mortgage market off government financing, they worry about making the move while the housing sector is still trying to clear excess inventory. "Reducing the conforming loan limits will test whether private lenders are willing and able to step up, but doing so this year may be premature," says Mark Zandi, chief economist at Moody's Analytics. "The cost to the housing market and economy of a misjudgment would be high."

There's speculation that President Obama will propose a major housing-related stimulus in the coming weeks as part of a broader economic plan. Whether that involves extending the conforming loan limits is anyone's guess at this point. But stay tuned: You'll feel the impact of this high-end housing issue either way.

Source
 

Avorysuds

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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!

Yes thanks republican government.

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

Thank you for admitting that Government caused the problem... Of course you do as you always do and seem to leave out the Democrats involvement but I'll just take what I can get from you in that at least you recognize that to much Government helped cause the problem.

Now I do wonder why you support Obama doing just as the Republicans did only on steroids... Wait, you support Obama because he is black, a male then a Democrat and hate Republicans because they have all different races and genders in their party.
 

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