The good news is that Housing Starts and Building Permits each increased for the month of May.

And in a statistical shocker, the monthly gains for May 2009 were (surprisingly) greater than the margin of error for both Starts at 17.2% (±14.4%) and Permits at 4.0% (±1.7%) over April.

The stunning news was the 45.2% (±5.8%) collapse below the May 2008 rate. That is simply an unbelievable freefall.

Of course, Housing Starts did not “soar” as Bloomberg claimed; you soar high int he sky, and a move from ankle to knee level does not qualify. This was not, as the WSJ asserted, a “Surge in Home Construction.”  Rather, it was a bounce off of record lows, as was correctly observed by the WSJ’s sister publication, Marketwatch:

“The surprising increase was led by a 62% gain in new construction of multifamily dwellings, the government estimated. Starts of single-family homes rose 7.5% to a 401,000 rate, the highest since November.

The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors, with large revisions common. In the past six months, the average monthly change in starts has been 14%.But in most months, the government can’t be sure whether starts increased or decreased. In May, for instance, the standard error for starts was plus or minus 14.4%.

Good stuff, Rex. Your recognition to context and accuracy is appreciated!

>

may-09-starts
Chart via Barron’s Econoday

>

Sources:
NEW RESIDENTIAL CONSTRUCTION IN MAY 2009
The U.S. Census Bureau and the Department of Housing and Urban
JUNE 16, 2009 AT 8:30 A.M. EDT

http://www.census.gov/const/newresconst.pdf

U.S. housing starts bounce back strongly from record low
Rex Nutting
MarketWatch, JUNE 16, 2009

http://www.marketwatch.com/story/housing-starts-bounce-high-off-record-low

Category: Mathematics, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

97 Responses to “Good/Surprising/Stunning Housing News”

  1. phb says:

    Far from good news…the reason Starts & Permits increased is because SOOOO many homes are stuck in limbo of short/foreclosure and real buyers (not speculators) are fed up and build from scratch rather than wait. Disclosure: This opinion is anecdotal only and I usually have no idea what I am talking about…

  2. KidDynamite says:

    I must be the only one who doesn’t understand how more housing supply will help here… doesn’t more housing imply lower prices ?!?!?! don’t we already have ample inventory and shadow inventory of unsold homes? how is an increase in housing starts bullish?

    ~~~

    BR: As I have written repeatedly, it doesn’t.

  3. leftback says:

    Noisy series. Yawn.

  4. DeDude says:

    And the great news is that a loss of 500,000 in a year can not happen for more than another year. So to all those negative dom-sayers I say: “its going to turn around soon”.

  5. franklin411 says:

    What’s with the fascination with y-o-y comparisons? Is it to prove that the economy fell off a cliff over the last 12 months? Is it to throw big, scary looking numbers out there?

    I think if there’s anyone out there who DOESN’T know that the economy collapsed over the last 12 months…you should let them enjoy their ignorance! At this point, all that matters is m-t-m and 3 month trends. We’re trying to figure out where we’re going–we know where we’ve been.

  6. tangentially:

    on the Mozilo side of things, re: Housing..
    http://www.counterpunch.org/ames06122009.html

  7. Transor Z says:

    Re-posted from previous Volcker thread:

    http://www.huduser.org/periodicals/ushmc/spring09/hist_data.pdf

    Charting bottom of Marianas Trench = YOU ARE HERE

  8. leftback says:

    @franklin: m-t-m data is mainly noise, like your posts.

    green shoots is where we’ve been; flat line city is where we’re at; double dip delite is we’re going.

    Smile franky – it’s a Secular Bear !!

  9. The Curmudgeon says:

    “all that matters is m-t-m and 3 month trends. We’re trying to figure out where we’re going–we know where we’ve been.”

    Indeed. The m-t-m comparison of weather trends in my area point to inexplicable warming on a massive scale. From mid-February to mid-May, there was an increase in the average daily temperatures of roughly 30 degrees fahrenheit. Extrapolating trends, it is clear that by December, the average daily temperature will exceed one hundred degrees.

    Of course, year over year, the change is negligible, but I already know where I’ve been. I just wish to find out where I’m going.

  10. Transor Z says:

    @TC: Awesome.

    See page 84 (page 24 of .pdf) in the HUD link I provided above. According to the data, US housing stock shrank in Q1 2009. So it would appear that we are in a contraction period (MA, if you’re reading).

  11. Init4good says:

    @Curmudgeon – LOL

    I am always amazed that gains and losses are reported in percentage terms, but there is rarely a reference (in the same sentence) to where the gain or loss was measured from.

  12. Mannwich says:

    Thanks for the smile this morning, leftback & curmudgeon. Thanks to f411 for providing the mindless turnover that led to the highlight reel slam dunk at the other end.

  13. gordo365 says:

    Agreed – “soared” isn’t the word that comes to mind when looking at the last bar in that chart…

  14. The Curmudgeon says:

    Transor Z…good stuff. The numbers starkly portray a market built on the illusion of demand created by easy money. We better hope for more immigrants.

    @MEH…

    Good article on Mozillo, but the whining from his employees about working overtime, etc., seems like just so much bullshit, based on my admittedly anectdotal experience. I was/am one of Countrywide’s closing attorneys for its local office. I don’t dispute the long hours during the boom (I worked them too), but nobody was making these people work these hours. During the boom, any of them could have gone elsewhere and worked less. Countrywide slapped the golden handcuffs on them. Processors were making nearly six figures. The branch manager made over a million dollars in 2005 during the height of the idiocy. Salesmen were making well into the six figures. And they bought Countrywide stock because that was making them rich, too. Oops, sorry dudes, didn’t you know that a processor with a high school education making $75,000 per year might be a tad overpaid? Two of the processors I know bought into the boom, and just as quickly lost their houses in the bust. Dealers should never do their own stuff.

    Now, things are not so rosy, not even with the mini refi-boomlet of the last few months that directly resulted from the plan by the Fed to buy RMBS with our tax dollars. Mind you, it was/is the Fed buying the obligations of Americans with the obligations of Americans, filtering the eligibility for the largesse (until the tax bill comes) through its own GSA’s (Fannie, Freddie and Ginnie), but that’s another story.

    My prediction: Countrywide will be re-sold and again become a stand-alone company after BAC blows up (2010-12?) and has to be “resolved” one way another, just like C will be. There is no way Countrywide is making money for BAC right now, even with the refi-boomlet, and BAC can’t continue to forever fill losses with government largesse.

  15. gordo365 says:

    KidDynamite – I agree.

    The bullish reaction to higher housing starts is like an LSD flashback to last year’s party. I guess it’s good because it keeps the construction industry on life support.

  16. DeDude says:

    Until the builders can get credit to build new houses this number will continue to fall. Question is will we get below 100,000 before it flattens out ?

  17. Curm,

    re: Overtime, I totally agree. Though, I thought that the Fact that the TARPed-out BAC was covering Mozilo’s Atty. Fees was Signal.

    It is amazing, as you allude to, what peeps accepted as “Real” during the high Heat of the FIRE ‘Economy’..

    What’s sad is that People still don’t understand Who is funding their “Loan”..

  18. call me ahab says:

    from Yahoo Finance-

    “The Labor Department said Tuesday that the Producer Price Index increased by a seasonally adjusted 0.2 percent from April. That’s below analysts’ expectations of a 0.6 percent rise.

    Despite the increase, wholesale prices fell 5 percent in the past 12 months. That’s the largest annual drop in almost 60 years.

    Falling prices can raise fears about deflation, a destabilizing period of extended declines. But most economists believe that efforts by the Federal Reserve to combat the recession will prevent that from happening.”

    Fed is in a losing battle- no spending= deflation and contraction

  19. manhattanguy says:

    Agree with @leftback at 11:11
    Double dip is where we are going towards. Current data is not telling convincingly that economy is recovering.

  20. ben22 says:

    haha franklin your comment is hilarious.

    On a more important note:

    If anyone is interested, as I can’t figure out how to post it here, over at quote.com they have a bloom feed on there, a couple videos in they interview the controller for CA.

    Yeah, that’s a scary video. They may eventually need to begin paying for things with IOU’s, which if your Lloyd Christmas you think are just as good as money, but we know they aren’t.

    If this plays out, that could be the start of some serious muni defaults. Muni’s never default…. until they do.

    Also, did people read through the PPI report today?

    Deflation folks.

  21. call me ahab says:

    b22-

    see my post @ 10:59

  22. wingnut says:

    Error: 404 “soar” not found.

  23. call me ahab says:

    manhattanguy Says-

    “Current data is not telling convincingly that economy is recovering.”

    the question I always ask myself- is- “recover to what”- to what benchmark are the “experts” hoping to return to- maybe-

    the recovery is here- we’re looking at it- and- maybe this is good as it gets for the forseeable future- maybe there will be no expansion, no growth in GDP, just a decelerating slope down and down until it finally stops- and flatlines- never to go back up- the new normal

  24. Andy T says:

    Agree with Kid Dynamite above. Aren’t they talking about RAZING certain cities in California and Michigan? We don’t need more houses. There’s also the huge shadow inventory of Repo’d houses that banks are sitting on because they don’t want to flood the market….New houses is really the very last thing this country needs….

  25. franklin411 says:

    Oh noes! Could it be? Could America really not be dead, despite the hopes, prayers, and fervent shorting of the bears?

    Green shoots, amigos…green shoots.

    Tuesday, Jun. 16, 2009
    Workers return to U.S. Steel’s Granite City mill to restart plant
    BY WILL BUSS – News-Democrat

    GRANITE CITY — About 100 maintenance workers will return to U.S. Steel’s Granite City mill this week to began preparing the plant to restart production.
    “In terms of production, when that might ramp up and start recalling workers, it’s still unknown,” Dowling said.

    Jeff Evans, who as president of the Local 68 represents 140 electricians at the mill, said that 41 of his members are returning to work this week, and he anticipates the rest will be called back in two weeks. Evans also estimated that as many as 600 steel workers who work in the plant’s blast furnace could be back in three to four weeks.

    “I was told others would return soon, but they didn’t give me a time frame,” Evans said.

    He has also heard that workers could be converting hot liquid steel strip into slabs in four weeks.

    “It take a couple weeks to warm up the blast furnace,” he said. “If they don’t warm them up, that could cause damage.”

    http://www.bnd.com/business/story/809473.html

  26. Thor says:

    AHAB – This 0.2 has at least in part, the rising cost of oil in it does it not? Would the number have been a drop if oil prices had stayed the same or gone down?

  27. rootless_cosmopolitan says:

    Barry, I wouldn’t give too much emphasis on the alleged statistical significance of the month-to-month change. Look at Table 3 of the report by the census bureau:

    http://www.census.gov/const/newresconst.pdf

    None of the m-t-m changes for each sub-category and region is statistical significant, according to this report. Only the total is supposedly. Lucky averaging I would say.

    I really would like to know how the census bureau gets the numbers for the margin of error (90% confidence interval according to the report, i.e. you would get it wrong for 1 out of 10 samples under the same conditions). I know how to calculate it, I just haven’t been able to reproduce the values for the margin-of-error of the m-t-m change, using the data series I downloaded from FRED.

    I also would like to second the question why an increase in housing starts is such a good news from a whole-economy point of view, given it only adds to the supply side when there has already been an excessive inventory of houses. Although it’s good news from my point of view, if there is more downward pressure on prices.

    rc

  28. call me ahab says:

    600 workers? wow- against a tide of -500,000 – I wonder if it is statistically relevant?-

    hmm . . . maybe . . . it . . . is . . . time to long- America’s back!

  29. ben22 says:

    @ahab,

    I read your post after I put mine up. I hadn’t seen that over at yahoo so I went and read the article. It’s funny, less and less people are worrying about deflation despite this, in fact, it seems like most economists are now dismissing it altogether and they are buzzing instead about the coming inflation, or hyperinflation.

    This should tell us how powerful credit deflation can be if it takes hold, as each person slowly realizes what is going on and them BAM,… just like subprime only much, much bigger. The more people that don’t think it can occur the more painful it can actually be.

  30. leftback says:

    Another sign that this is not over. More punters lining up to pay fees, baby !!
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aZJCL4hmPpb8

    ben22: re munis. “Things that can’t happen, are about to..” !!! If CA is the leading edge of this thing, as it has been, then there really really are no green shoots. Wait until you see what state and local govt layoffs do to CA unemployment, foreclosures, housing….

    Just because you’ve never seen widescale muni defaults doesn’t mean to say that it can’t happen. US government is not bailing out CA, as yet, so that means depression in the Golden State or defaults, or both.

    I’m telling you, those 10-yr and 30-yr Treasury yields are going to look very juicy in the next few months. Return of capital trumps return on capital in a debt deflation.

  31. Transor Z says:

    @Andy T:

    US Housing stock shrank in Q1 2009. There’s a break-even number to offset shrinkage caused by degradation/conversion/redevelopment that apparently wasn’t met at the 400,000 – 500,000 annualized levels of Q1. I don’t recall reading that anywhere but it appears to be the case from the data.

    There has to be some allowance for regional demographics also.

    The other point is that it seems to me that home size matters for this analysis — 2BR/3BR/4BR and square footage. No clue where to find that data though. Who thinks the market is strong for 2500+ square foot homes right now?

  32. Thor says:

    You know guys – an obvious counter to these number is our real world experience. I think that the posters on this blog represent a very wide geographic sampling of the nation. I’ll ask you all this? Do any of you see new home construction in the area’s of the country you live in? I’m in LA and drive east through the heart of the metro area every weekend and I’m not seeing any new construction at all, especially homes . . . .

    I was particularly struck by the multi family number. There are two very large condo projects in Hollywood that have been stopped mid build for almost a year, one of them takes up almost an entire block.

  33. cvienne says:

    @Franklin411 (11:26)

    “GRANITE CITY — About 100 maintenance workers will return to U.S. Steel’s Granite City mill this week to began preparing the plant to restart production.
    “In terms of production, when that might ramp up and start recalling workers, it’s still unknown,” Dowling said.”

    Are u friggin’ kidding me?

    They’re simply in there to warm up the furnaces and roll out a couple of slabs so the whole thing doesn’t turn into rust (should it ever be needed)…

    That’s like having a maintenance crew come out to a foreclosed property and board up the windows and cut the knee high grass so the place doesn’t get infested with termites while it’s languishing on the real estate market!

  34. Mannwich says:

    @Thor: They’re still finishing several condo buildings here in the Twin Cities, much to my amazement. There were already many empty/more than half-empty condo buildings all over the place here. There’s also still some (not much) home buliding going on. One teardown going on right around the corner from me and another was recently finished nearby.

  35. DMR says:

    Isn’t housing a 12 month cycle? Every year, construction goes up in the summer and down in the winter. Even in the “freefall” phase, note the flat regions in the summer of 2007 and 2008 when some construction happened. Especially in housing, the only statistic that makes sense is a year over year number or a trailing 12 month average. So, in the summer, the statistics look better than they really are.

    Similarly, in late summer, when people are more focussed on labor day vacations and preparing for school for their kids and don’t want to move houses, the drop will start to look worse that it really is. And who wants to build a house in winter? Only a part of the drop would be due to the secular bear market. The remaining drop would just be from cyclical factors.

  36. call me ahab says:

    thor-

    from Yahoo Finance- “the core PPI dropped 0.1″

    previously I posted-

    “Fed is in a losing battle- no spending= deflation and contraction”

    another observation- when an economy hinges all its survival on 70% consumer spending- well- then it only set itsef up for a huge fall when consumers refuse to spend-

    Rush Limbaugh opined yesterday that shopping was commerce and consumers should spend- i.e.- nothing wrong with shopping-

    what a dumbass- there is something wrong with shopping when it is a recreational activity- done solely for entertainment- then you have an entire economy based on descretionary purchases- and when that faucet gets turned off- well- it has a huge impact

  37. ben22 says:

    @LB,

    I couldn’t agree with you more re: 11:33. It’s all about boosting sentiment via green-shoots. It’s clearly working but it isn’t real, so it won’t last. Look at Franklin, he’s so blind he doesn’t even realize what’s going on in his own back yard. You’d think he’d pay more attention since it will directly impact him.

    They are going to have a major cash crunch there by July 28. What I found interesting also is that they had developed a budget in February that the controller said was basically nonsense because none of the numbers for things like tax revenue were even close to reality. We just did one of those nonsense projections on a national level, it was called the Stress Test.

  38. Transor Z says:

    South of Boston on Route 3A in Weymouth/Hingham there’s a smallish upscale retail mall opening. I can’t think of any others I’ve seen in the last year or so.

    There have been a few large condo projects I’ve seen in Boston finishing over the last two years and one in Quincy Center. I know of one half-finished one in the city that seems to be in limbo. Brownstone/single-family work tends to be rehabs.

  39. karen says:

    Posting a link to an interesting and informative site that was new to me: http://www.goldbarsworldwide.com/

  40. rootless_cosmopolitan says:

    @DMR:

    The data are seasonally adjusted, i.e. the seasonal cycle about which you are talking is supposed to be removed.

    rc

  41. ben22 says:

    Thor,

    fwiw

    I don’t see very much residential construction at all in my area DE/Philly but there does seem to be a decent amount of commercial activity in both places. Might not be the best indicator though, we’ve held up relatively well around here with much lower declines and a higher average income. Downtown philly seems to have all kinds of work going on right now, and they just slapped up a huge Comcast building. When I’m in the nice residential areas of the city though they are loaded with for sale/for rent signs and I’m noticing more and more empty stores walking around the city lately. In DE on the waterfront in Wilmington they built up pretty big condo complexes right at the peak, maybe 1,000 units total, most of them are empty now and all the stores that were supposed to go in the bottom of the buildings are for the most part vacant. The condo’s in the River Tower down there were going for $450k-$550k or so at the peak, I think now they run about $350k.

    I was Carmel Indiana the last few days, there did seem to be a decent amount of residential construction in the immediate area I spent my time in. Looks like they have really built that particular area up the last few years. Things there though are still very affordable especially compared to where I live.

  42. For some different housing news.. if you go around reading housing blogs for many of the harder hit regions like Nevada, Arizona, California.. you will see the same story… Lots of buyers and little inventory on the low end where they want to buy.

    The foreclosure moratoriums and loan mod efforts have constricted supply (I really can’t overstate how much this is true) and the low interest rates and tax credit has spurred demand.

    I was looking at trustee sales and sales sold to third parties (investors) is extrememly high, I don’t have a historic data set but I don’t doubt that this is at all-time high levels:
    http://effectivedemand.blogspot.com/2009/06/foreclosure-update-for-los-angeles-and.html

    From my looking at a sample of data, I don’t believe this is because the banks are more motivated on price but instead it is because investors believe they can push price on the low end due to restricted supply. I know Barry doubts the wisdom of crowds of most markets but this is a very narrow field of people betting their money and living with the consequences. They are very calibrated and they are voting that now is at least a temporarily very good time to be making some money in the market.

  43. cvienne says:

    @Thor

    The anecdote on home building from this region is as follows:

    I have to report from 2 areas where I have homes:

    In Howard County Maryland, believe it or not there are still building projects going on…Most of it is “finish-up” work from things that broke ground during the boom (back in 2006), then seemed to pause, and it seems recently they decided to go ahead and finish the things…There’s more building than one would expect (so that’s kind of an eye opener), but one has to understand that the economy in this area isn’t that bad…There is A LOT of government work because of the proximity to WDC…Near here is also Ft. Meade and there has been a recent influx of soldiers & military personnel relocated to Ft. Meade from various other base closures…There is also a big “high-tech” industry (biotech especially), and all the big companies like MSFT, IBM, CSCO, Oracle have huge branches nearby…Not to mention Lockheed Martin, Northrop Grumman, and others who serve the military complex…Unemployment here is still in the low 5% range…

    Out in WVA, there is no new development and they’re still trying to work off the large inventories of townhouse communities that sprung up during the end of the boom…Price have come down to where that inventory “should” be able to move…I think there are many potential buyers, but the problem is not really with the home prices, it’s with the bank financing…

    The banks aren’t lending…PERIOD…

  44. karen says:

    Keeping up with California is going to be difficult for the rest of the nation:

    How $113 million can be lost on O.C. offices
    June 15th, 2009, 3:02 pm · 1 Comment · posted by Jon Lansner/ocregister.com

    How do you lose $113 million on Orange County office buildings?
    If you’re Maguire Properties, you build one and buy three more at the market peak!
    Today, Maguire said it finally sold its landmark 3161 Michelson — the shiny tower off the 405 at Jamboree — that it opened in 2007. Good news? No more losses above the $73 million previously disclosed.
    Two weeks ago, Maguire manage to lose $40 million when it sold a 3-building complex in Orange that it had bought in 2007.
    More commercial property news …
    Chain with 10 O.C. hotels in bankruptcy
    How $113 million can be lost on O.C. offices
    Should St. Regis declare bankruptcy?
    St. Regis resort reportedly near foreclosure
    Big investors show 95% less love for O.C. property
    O.C. investor giving San Diego hotel to the bank
    O.C. offices cost investor $40 million loss
    O.C. investor sees real estate opportunity
    Ford Motor sells Irvine HQ

  45. Thor says:

    Karen – do you live in O.C? If so have you been to Disney Land lately? I’ve been wondering how they’re holding up through all this.

  46. rex says:

    The most reliable and informative part of this report is single-family building permits.

    Over the past three months, they’ve risen 7.1%. In April, the three-move change was up 10.5%. That’s the first time since November 2005 we’ve had an increase over three months.

    Remember, building permits are a leading indicator. The level of new building right now is about one-third of the normal pace of building needed to satisfy population growth and replacement of old homes.

    One more issue: Location, location, location. It might be perfectly logical and make good business sense to build a home if you are in an area that is growing. No one is building in Las Vegas, but they may be building in Elko.

  47. karen says:

    Thor, Disney reports July 30th. I have no idea of the crowd level, but did pick up this blurb on-line: “The Disneyland Resort has two seasons, on season, and off-season. On season is considered summer starting in late June and ending Labor Day, Christmas (a two week period beginning the week before Christmas, ending New Years Day), and Spring Break. Off-season is every other time of year.”

  48. karen says:

    And more on the, “If you can’t sell ‘em, rent ‘em” front:

    Tustin Cottage building 33 more condos
    More than half the finished condos have been leased.
    By ELYSSE JAMES THE ORANGE COUNTY REGISTER

    More than half of the units at the Tustin Cottages condos have been rented, and the second phase of construction has begun at the complex at Red Hill Avenue and El Camino Real.
    Of the 33 condos that are built, five are being used as model homes, and 19 units have been rented. Eventually there will be 93 condos in the gated complex next door to Tustin High School.
    The next set of 33 units will be finished by December, said Jill Parker, director of sales. All 93 condos will have the same five floor plans though they may have different cabinets and paint. The last set, 27 condos, will be built next year.
    The company decided to lease the condos after it had trouble selling them. The condominiums went on sale in October and were taken off the market by late December. The prices had gone down to the low $400,000s before being put up for lease.
    The prices for the two-story townhomes start at $2,400 a month
    “It was perceived well. Even in this economy, people still need to have a place to live,” Parker said.
    The three- and four-bedroom condos have five floor plans, a two-car garage, and there will be 55 parking spaces for guests. A pool, spa, outdoor shower, fireplace and fountain opened in March for residents.
    The condos are two and three stories and range from 1,582 square feet to 2,042 square feet. Many of the townhouse-style condos also have Juliette balconies, and some have full balconies off certain bedrooms.
    The sales office is open from 10 a.m. to 5 p.m. every day and other hours by appointment. Information: 714-665-8244.
    http://www.ocregister.com/articles/condos-units-five-2460851-floor-tustin

  49. cvienne says:

    @LB (11:33)

    “I’m telling you, those 10-yr and 30-yr Treasury yields are going to look very juicy in the next few months. Return of capital trumps return on capital in a debt deflation”…

    I’d agree with you there LB…

    You know? It sure seems like this opex week the market is going to struggle to make a half-assed correction, and figure out something it can spin into green shoots come the first of July for one more run at 962 or so…

    It may flail around here, so the simplest thing to do seems to be to just PARK IT in the TLT and catch a ride from 91 to 95…It would get you through until next Tuesday at least…

  50. hopeImwrong says:

    LB – “Return of capital trumps return on capital in a debt deflation.”

    So True. Write it on a post-it and paste it on your windshield! Everyone.

  51. hopeImwrong says:

    RE op-ex

    The max pain for SPY has bee consistently slowly rising over the last few weeks from about $80 to about $85. I expect a continued rise (to maybe 86-87) as the market corrects to 88. 88 probably will hold this time around.

  52. hopeImwrong says:

    In Rochester NY, the new construction is not totally dead, but spec homes are few and far between this year. Franchise builders (Ryan Homes) will break ground with a signed contract. Independent builders don’t seem to be able to get builders loans. Activity is low. Commercial activity is low too, but has been for years.

  53. call me ahab says:

    Karen-

    Maguire Properties sounds like the Japanese- buying up inflated US properties in the 80′s- at the height of the market- such as Rockefeller Center- only to lose their ass

    http://www.nytimes.com/1989/10/31/business/japanese-buy-new-york-cachet-with-deal-for-rockefeller-center.html

    nothing like buying high and selling low

  54. jc says:

    DB forecasts another 40% fall in NYC real estate. The last big value RE mkt after the sand states collapsed, thus far foreclosures haven’t been a big issue here but 40% (more in 12 months is a LOT!). NYC will bump CA and FL off the front pages. A fall like this wouldn’t be good for real estate nationally or the stock market. This would really put the Crash of 08 well beyond the first great depression. If DB is right we’re really fukked. They base their forecast on 5% mortgages if you want to think about double-dipped fukked with higher (normal) interest rates. Is everybody happy?

    http://blogs.wsj.com/developments/2009/06/16/deutsche-bank-predicts-40-drop-in-new-york-home-prices/

  55. cvienne says:

    Sounds like Maguire showed up to the party in a limo…

    …and left in a taxi!

  56. DMR says:

    @rootless_cosmopolitan

    This is from their website:

    “Monthly figures are often volatile; housing starts fluctuate more than many indicators. According to the Commerce Department, it takes five months for total housing starts to establish a trend. Consequently, we have depicted total starts relative to a five month moving average. ”

    The numbers are not seasonally adjusted. In fact, all we have to do is look at the chart and squint to see the seasons! Plateau in the spring and summer when rising demand battles the overall trend. Steep drop in autumn when the natural lack of demand amplifies the trend.

    The 6 month smoothing is just not doing it for me. It tells me more about the American school year than the underlying trend.

  57. Transor Z says:

    So why so many Jeremiah’s railing against peeps not paying attention? Are we hard-wired to miss important details in our environment? Fascinating/terrifying/funny video from a Harvard study:

    http://www.youtube.com/watch?v=38XO7ac9eSs&feature=player_embedded

  58. cvienne says:

    @All

    So is the support going to come in at 912? or down at 890?

    My $$ has been on 912 all week…

  59. thetanman says:

    Karen,

    That is exactly what’s happening in my area. I’ve posted several times about our mini building boom, in the midst of abandoned and vacant homes and apartments. We’ve had 10 or so partially finished houses burn in the last few months, and for sale and especially for rent signs are springing up everywhere. If money’s cheap, people will build no matter what. And after trying to sell the insane condos supply, they have started to try to rent them. And they are building more. The sale and rental markets are being crushed by supply. I have only one vacant unit, but 2010-2011 looks like it will be rough.

  60. Thor says:

    cvienne – Look at you with your prediction from yesterday coming true ;-) Hope I didn’t just jinx it

  61. call me ahab says:

    hmm . . . interersting afternoon

  62. cvienne says:

    @Thor

    It ain’t over until it’s over…

    Anyway, I took my profits yesterday and ran…I’m 100% back in cash right now…

    I’m just waiting for the turnaround…I’ve got it in my mind 912…But I’m ‘rooting’ for I-man to get a glance at 890…

  63. Onlooker from Troy says:

    “Independent builders don’t seem to be able to get builders loans.”

    Gee, I can’t imagine why. ;)

  64. karen says:

    my spx level to watch is 908-909 (intersection of 34 ema and 200 simple ma).

  65. Thor says:

    Cvienne: yeah, not over yet. But does anyone remember the last time we had two days down as much as we do right now?

  66. rootless_cosmopolitan says:

    @DMR:

    I am afraid you are mistaken. Look at the report by the census bureaus, in which the data have been published:

    http://www.census.gov/const/newresconst.pdf

    It clearly says the data are at a seasonally adjusted annual rate.

    What you quote from their website doesn’t contradict it. The data are very volatile from month to month. This is true also with seasonal adjustment.

    rc

  67. Onlooker from Troy says:

    cvienne

    I don’t know, it still looks like it’s all about the $. Which picked itself up from it’s little stumble this a.m. it seems.

    Although oil isn’t reacting like you’d think so far today. Still up a tad. Must be all that industrial activity going on. ;)

    http://www.calculatedriskblog.com/2009/06/industrial-production-declines-capacity.html

  68. Onlooker from Troy says:

    thetanman re: http://www.ritholtz.com/blog/2009/06/goodsurprisingstunning-housing-news/comment-page-2/#comment-183629

    Indeed, more malinvestment of capital. When all you’ve got is a hammer, everything looks like a nail.

    We need some different tools that produce something we actually need, not just more housing stock.

  69. cvienne says:

    @karen

    908 is also the 233EMA on an hourly chart…

    I like 911.43 because it’s support above a downtrend line from the highs of May 8th, May 20th, and May 29th…Then there was a GAP UP and it’s been a little overhead bubble since…

    I think if break below that line, people are going to have to make some hard choices about staying long into the close of the month…

  70. cvienne says:

    @onlooker

    The oil chart still looks fantastic…Everyone in the world knows that the fundamentals for oil aren’t that good right now, but the chart still looks fantastic…

    That’s why I’d expect the S&P to hold support here (912 or so)…All you really need is a little more giddyness in oil to take this market back up…That, & I’ll bet GS & JPM are watching like hawks right now to see if a bunch of “shorts” come wandering into the fray here (SO THEY CAN CRUSH ‘EM)…

  71. Thor says:

    Cvienne: That, & I’ll bet GS & JPM are watching like hawks right now to see if a bunch of “shorts” come wandering into the fray here (SO THEY CAN CRUSH ‘EM)…

    Is this illegal though? Or just dirty capitalism?

  72. [...] good, surprising and stunning news in today’s housing data, FusionIQ CEO Barry Ritholtz says. The good: housing starts and building permits each increased in May. The surprising: monthly gains [...]

  73. dss says:

    @Thor:
    There are still house being built, mega houses, $3-5 m. There are also tons of houses on the market. One just sold at 1.8 m after being marked down from 3.4. No rhyme or reason.

  74. Thor says:

    DSS – I see the same out in Palm Springs where I spend a lot of my weekends. I don’t think the super rich are really being affected much by the downturn. If you’re making millions of dollars a year what’s a few hundred thousand off the top?

  75. Mike in Nola says:

    Sorry, been out all morning, so I haven’t checked out all posts on all new threads, but is anyone paying attention to the REAL news? (I know a few are.) I noticed CNBC’s site talking only about housing. Instead, the real news is

    Goldman same store sales down big

    Redbook – bad

    PPI – looks deflationary ex fuel

    Industrial production down big.

    http://www.bloomberg.com/markets/ecalendar/index.html

  76. call me ahab says:

    m in nola-

    please see my post @ 10:59 and b22′s post @ 11:01-

    all over the PPI and deflation

  77. Mike in Nola says:

    I agree with both of ya.

  78. Mike in Nola says:

    Some thinking guests on CNBC today for a change, Stephen Roach and Mort Zuckerman. There are several videos on the CNBC site including a septobox.

    It’s rather pathetic to see the hosts having to joke about trying to pull a bullish scenario out of them.

    http://www.cnbc.com/id/15839263/site/14081545/?tabid=15839796&tabheader=false

  79. jc says:

    I wonder what a 40% decline in NYC RE would do to CITI? Just a couple banks write co-op loans right? Condos and co-ops have traditionally moved down harder than single family type homes, right?

  80. manhattanguy says:

    “cvienne: The oil chart still looks fantastic…Everyone in the world knows that the fundamentals for oil aren’t that good right now, but the chart still looks fantastic…”

    I covered my shorts ($DUG) for a profit and went long with $UCO. If it OIL breaks the trendline, I will go short.

  81. Andy T says:

    SP500 on the 60 min definitely has the look of completing/completed five wave decline….some kind of bounce now into the afternoon, or for rest of week shouldn’t be surprising. That widely followed 200 day SMA also comes in 907, so we’ll see some sheeple buying in front of that level….

    Short term bears…prepare for a little bounce….also, in order for this to be a prelude for something much larger, bears don’t want to see action above 939 (61.8% retrace) from here. Are we having fun yet?

  82. Mike in Nola says:

    Hussman posted another comment yesterday debunking the “money on the sidelines” argument I am sick of seeing on CNBC.

    http://www.hussmanfunds.com/wmc/wmc090615.htm

  83. cvienne says:

    @Andy T

    Yeah, that 939 level ought to be tested right about next Monday 6/22…

  84. ben22 says:

    AT,

    In my early attempts to see waves I’ve come to a very similar conclusion as you. I still think we are going to move up to the discussed range I’ve been using here for months before this is over. I also think that people that think March was THE low will eventually be proven wrong. Just not yet.

    @ Mike in Nola,

    Good eye

    All over all of that data. Most aren’t but that’s what its all about! I’d mention the ex fuel, is a mini bubble waiting to burst, that will deflate soon enough.

  85. cvienne says:

    @ben22

    ben – I’m starting to see something new after I read Andy T’s post (2:49)…

    I like going back and retesting 939 (probably by next Monday, 6/22)…However, if the market can’t get through to the upside there, I see the catalyst for the start of a MAJOR DOWNTURN…

    I’ll explain my reasoning in another post if you’re curious…but the “outlier” is that there might actually be a cascade that takes the S&P all the way down to 576 by mid-August…

    Now THAT would catch a lot of people off guard, wouldn’t it?

  86. ben22 says:

    cvienne,

    What you are talking about could certainly happen. The “outlier” though is already out of the bag, it’s called credit deflation, it’s been a threat for a long time, not it’s actually here. Combine that with the negative sentiment and worry that seems to be gaining in the average person (that isn’t showing up yet in the data) and there you have it, that will happen before the data shows it, which is why using things like consumer confidence to forecast the market moving forward is a complete waste of time.

    I’m set up so that the little bit of longs that I have left will be forced out between 975-1k range or if we break 880. I’m not going to time it perfect, so if I get the high target I’m up more, and if we get the 880 target I’m up less.

    I won’t go big time short until I feel like probability is on my side and it isn’t clear to me right now that we are there so I’m just waiting doing a few shorts like the ZSL trade here and there.

  87. Onlooker from Troy says:

    I haven’t seen it mentioned here but the hard ceiling that the 200 EMA provided for the $SPX, $TRAN, and Dow is certainly interesting. And we finally closed below the 20 EMA for the first time in this rally. Will all those “anxious” money managers come in and bid this up through the 200 EMA and into the high 900s? Maybe more importantly, will the dollar stay firm, although it was down 0.5% today with the market down. Hmmm.

  88. thetanman says:

    Mike in Nola,

    Here’s an article about the lack of correlation between MOS and market returns.

    http://seekingalpha.com/article/96030-what-about-all-that-cash-on-the-sidelines

    To paraphrase motivational speaker Matt Foley, “you’ll find as you go out there that MOS doesn’t tell us jack squat.”

  89. constantnormal says:

    @ F411 10:02 am

    “We’re trying to figure out where we’re going–we know where we’ve been.”

    Here’s a road map:

    http://www.voxeu.org/index.php?q=node/3421

  90. constantnormal says:

    What happened to the usual pumping action at the end of the day?

  91. tom_k says:

    Cramer is calling a bottom in the housing market today based on these numbers. Can someone make a note of that for the future?

    Cramer: “The housing market has bottomed!” (for the record)

    One month against trend does not make a reversal… we still haven’t addressed the bigger long-term issues of housing prices versus income growth (or lack thereof.)

    Housing + transportation at 50%+ of the average American’s income remains way too high – it needs to come down to the 30-40% bracket, either via declining property values or increasing incomes. We don’t have enough of either.

  92. ben22 says:

    I wonder how many people will lose money on Cramer’s latest bullshit.

    http://www.youtube.com/watch?v=_nkZ3eHeXlc&feature=channel_page

    one of my personal favorites of his.

    @ constant

    thanks for that link above, paper was interesting and it had a lot of good charts in it.

  93. Onlooker from Troy says:

    Cramer’s been predicting a bottom for housing in June since some time last year so you knew he would grasp at whatever evidence he could to try to make his prediction valid. And I’m sure he’ll come up with some kind of B.S. argument when it is patently obvious that he was way off. I’m sure it will be someone else’s fault that it didn’t bottom. All those naysayers made the market go down. :)

  94. DMR says:

    @rootless_cosmopolitan

    You’re right! That’s so strange though that a clear 12 month pattern is visible even after the seasonal filter has been run.

  95. [...] we have not seen an explosion in new Housing Starts — rather, this is a noisy volatile series that frequently shows a monthly gain, but continue to [...]

  96. [...] we have not seen an explosion in new Housing Starts — rather, this is a noisy volatile series that frequently shows a monthly gain, but continue [...]