Housing Permits Sink to 14-Year Low

[hausdok]

This article from Builder Online is about how the current credit crunch is affecting the construction industry.

To read the article click here.

[Chris Bernhardt]

Does anyone remember why permits were down in 1993?

I have talked to several senior realtors in my neck of the woods and they are predicting more multi-family housing in the future (condos).

Chris, Oregon

[kurt]

Folks don't remember back that far, but '91-92 were not good years in real estate; at the end of '91, most folks involved in real estate around here were sweating BB's.

The fallout of the bad years extended into '93 because folks were still gunshy. Look @ a chart from '93 on to the present; it goes straight up, and we're now in a free fall back down.

[Bill Kibbel]

Originally posted by kurt

Folks don't remember back that far, but '91-92 were not good years in real estate; at the end of '91, most folks involved in real estate around here were sweating BB's.

The fallout of the bad years extended into '93 because folks were still gunshy. Look @ a chart from '93 on to the present; it goes straight up, and we're now in a free fall back down.

Absolutely correct. That was the end of the 80's boom. House prices had to quickly return to "normal" levels for the market to pick up again. That return to normal was like a boat stepping down on a canal lock. The current return to normal prices will be like that boat dropping over Niagara Falls.

[Brian G]

Damn...that is one scary chart. Maybe I should start polishing up the ole' carpentry tools. [:-bigeyes

Brian G.

Never Sell The Tools [^]

[Chris Bernhardt]

Looking at Bill's chart the first thing that came to mind was what other big ticket item have we seen a meteoric rise in prices that never fell back to something sane?

New cars.

Chris, Oregon

[kurt]

True. Although, cars are a lot better now than before. It's surprising how nice even cheap cars are nowadays.

[n/a30]

The huge jump in housing costs in the past 6 years is far beyond a healthy / reasonable increase. Greed played a huge factor in the overall escalation.

The slow down in sales should bring an eventual market correction base on currently inflated prices. Tax based and independent appraisals then should also change the picture, but it is rare for them significantly lower the assessed values once they are inflated.

The fiscal infrastructure depends upon the escalating prices at some rate that is reasonable and affordable. Thus, the bubble will continue to deflate until other economic factors are moderated.

Large ticket items are not moving significantly enough to stave off long term repercussions because the consumer confidence in the economy is at best lack luster.

Due to excessive federal spending the deficit is nearing a Trillion dollars owed to foreign interests such as China and Japan, who naturally want an attractive return on investment.

The fed is warning of a pre-recessionary period that may take many years to play out. Reference Federal Reserve Chairman Ben Bernanke's speech to Congress. It brought about huge sell off at Wall Street. The stocks got devalued and thus the dollar weaker again.

Predictions:

1. Belts and budgets will be tightened,

2. US citizenry jobs lost,

3. Productivity drops,

4. More manufacturing and service sector jobs will be outsourced to third world and developing countries,

5. Huge immigration problems will not be fixed by using enforcement,

6. Federal spending will continue at current levels into early 2009 and

7. The US will attempt to appease creditors by printing more paper-backed capital.

8. Social Security funds will be greatly strained as Baby Boomers expect to reap rewards.

9. Banks and major lenders will continue to feel the pinch of their poor management of sub-prime loans to persons with inadequate credit and/or sound finances.

10. Sales will continue to be sluggish in the next three to four years.

11. Some irresponsible people caught in the crunch will turn to unwise spending on escapist based items such as entertainment, booze, and excessive use of (prescription) drugs to quell their economically depressed states.