Housing starts expected to hit half-century low: Consumer prices falling at fastest pace in 60 years

[Tandalayo_Scheisskopf]

Source: Marketwatch

WASHINGTON (MarketWatch) -- Few observers have ever seen anything like the economic data that will be released in the coming week, with the consumer price index and housing starts each expected to breach records dating back to the late 1940s.

With the global economy descending into a nasty recession, the October data could send a chill down the spine of policymakers, who are pulling out all the tricks in their tool kit to prevent a wider meltdown.

As everyone knows, this downturn began in the housing sector, with a global credit bubble inflating U.S. home prices, and homebuilders responding with a frenzy of construction. Now that the bubble has collapsed, everyone is looking to housing for any sign that the worst may be over.

Treasury Secretary Henry Paulson said last week that "market turmoil will not abate until the biggest part of the housing correction is behind us."

Read more: http://www.marketwatch.com/news/story/Housing-starts-seen-lowest-over/story.aspx?guid={4CA0BEBE-9AAF-4F47-AEE8-86042D8CEB2D}

---

What I find quite fascinating is the overall tenor of the comments on this piece, at Marketwatch. The reliably frothing types don't seem to want to touch this with a ten foot pole or a five foot Hungarian.

[OhioChick]

1. Really bad days lie ahead....

K&R

[Dappleganger]

17. Turn some of those McMansions into duplexes...

there aren't enough starter homes around here, which people need more than the big ones.

I am grateful that we were able to get our small-ish home at the beginning of the bubble, so our 'loss' is only on paper (plus we have good equity). We have the smallest floor plan in the neighborhood out of 6 different plans. There are plenty of times I have envied those with the 5 bedroom plans (there are 6 in our family), but when housing prices fell guess which floor plan sells the easiest? Right--the smallest! It is cheaper to cool in the summer and to warm in the winter, easier to take care of all-around. I really do hope that out of some of this financial and housing mess that people begin to realize that bigger isn't always better, that we aren't happier with the latest and best all the time and we are a nation trying to keep up with the Joneses.

[CrispyQ]

38. We have a very small house on a decent sized lot & we love it.

There have been times when we thought about upgrading, but decided not to. We paid our mortgage off 8 years ago & that has been real motivation to stay where we are. The thought of having a mortgage makes me queasy. After my husband was laid off in '04, I offered him a chance to take some time off, even though I was only working part time. If we had had a mortgage, he would have had to look for a job immediately. And you are right, maintaining a small house is easier & cheaper. We replaced all of our windows this year - that was 5 windows! ;) I look at some of the McMansions & wonder how much these people pay just for window coverings!

"Life is about the things you do, not the things you have." ~Chris in the Morning, Northern Exposure

Welcome to DU, Dappleganger! :hi:

[maseman]

2. What goes up must come down

The bubble went up and up and up and now it burst. It will take some time to settle back down including housing starts and the inventory levels. It is indeed a hard time for many and more will probably be impacted over the next year.

Maybe, just maybe the biggest lesson to be learned by Americans is the same lesson that taught most of our parents and grandparents about living on one's means and thriftyness. I try to do that myself. We both have good jobs but drive modest cars, own a modest home, try to take modest vacations, etc. I feel bad for people who got too much house a few years ago and are now stuck with less value than owed and a house they cannot sell.

[pitohui]

14. i'm glad you both have good jobs but most couples don't have that

i know damn few couples who "both" have good jobs, and of those who do, let's face it, they come from a different class background and had opportunities available to them that simply aren't available to a great many of us

the greatest predictor of how wealthy an american will be is how wealthy his parents are -- there is a big lie about working hard and being "thrifty" but the reality is that inflation of basic necessities (esp. health and education) has been so high and that wages have been so depressed for so long that all the "thrifty" in the world means nothing to most people

americans aren't broke because they bought a new teevee on a credit card, teevees and consumer electronics have never been cheaper

americans are broke because most of us -- esp. the females among us -- don't get paid shit

i'm tired of couples where "both of us have good jobs" preach about thrift when they have no idea what they're talking about

fewer americans take vacations than they did in the 1950s, for just one example -- we give up more and more, and live poorer and poorer lives, while being assailed in the media as spendthrifts, and i'm just tired of hearing people parrot that crap

in the 50s and 60s even the lower middle class would take a vacation once a year if only to camp or to the beach, now many middle class families go years between vacations

that's just one example of "thrift" -- you can't get thriftier than you never get to do or enjoy the activity at all, that previous generations took as a matter of fact

[fascisthunter]

27. Thank You for That

must be nice, huh?

[Hannah Bell]

32. Yes, thank you. When half of households make under 50K/year,

it's really ludicrous to be talking about how spendthrift they are. Spendthrift on what?

[Skittles]

33. I hear you, pitohui

indeed I do

[raccoon]

37. Good post.

"the greatest predictor of how wealthy an american will be is how wealthy his parents are"

Amen to that. There are some exceptions, but they're going to be fewer these days than in previous decades when the economy was good.

"but the reality is that inflation of basic necessities (esp. health and education) has been so high and that wages have been so depressed for so long that all the "thrifty" in the world means nothing to most people"

Add to that, many people, esp. in low-paying jobs, don't have group health insurance, and have to pay for any medical, dental, vision care out of pocket.


"americans are broke because most of us -- esp. the females among us -- don't get paid shit"

and many of us, male and female, have to pay for any medical, dental, vision care out of pocket.

[shanti]

36. i work

with someone that refinanced their very modest home a couple of years ago, probably for way over what it was worth. her buying was out of control: vacations, new acura, truck for son, etc. she's in foreclosure now...sad, but i saw it coming. oh, and her husband was clueless...

[mwb970]

3. Maybe we should pay people to tear down some of the extra houses. /nt

[mbperrin]

5. Of course, there are no extra houses.

This whole bubble mess is what happens when reality meets delusion. Prices rising by multiple % each year and making huge profits from sales of same on an ongoing basis is a delusion. Getting a house paid for and living comfortably in it is reality.

Reality: what are houses for? For people to live in, out of the weather, with some security.
Delusion: what are houses for? For people to sell every few months or years to make money and buy another and do it again.

Reality: Houses need to be sold to people who will live in them, at prices they can afford.
Delusion: Problem is too many houses, investors lost money, all sorts of derivatives and other shadow instruments are a good way to do business.

[Waiting For Everyman]

8. Sure, more destruction is just what we need.

Instead of building things, lets just destroy, destroy, destroy. Let's shrink the entire economy and all of its tangible assets to infinity. As long as banks make their profits and lawyers make their fees, who cares?

Um, where are all these displaced people going to go? A few million more this year... not a big deal, huh?

The market will work one day, they'll get another job, and be right back in the game the next day, and finding somewhere to live with all of these empty houses torn down, right?

No. They'll be blackballed out of the economy permanently, as everyone else it has already happened to has been - with previously sterling credit. But oh, we have to tighten lending standards now, don't we? We have to charge higher interest for "risk" and require more documentation, and more time at a job, to be WORTHY of existing in a decent way. Right????

If a full moratorium isn't slammed on this foreclosure machine NOW, we're all going under. And don't think for one minute it won't come to you too.

What happens when you perfect credit people lose your job next week? How about if your partner does too? How about if the person you think you could run to in an emergency does too? What if that goes on for 5 or 6 months or more, as it has for other people already? How invulnerable are you really? Want to find out?

Keep it up.

[girl gone mad]

12. To be honest, they'll probably have to start bulldozing..

some housing tracts.

Right now, neighborhoods sit empty. Foreclosed homes are being looted and vandalized. Some have become havens for drug dealers. With little tax revenue coming in, the police departments are burdened having to keep up with the crime. Untended pools become mosquito incubators and the town has to pay to deal with that as well.

Too many houses were built. Too many of them are in places that have no jobs to support the local population. Too many of them are unaffordable for a middle class family to heat, cool and maintain.

One lesson we could take from this mess is that unregulated housing development is as dangerous as an unregulated stock market. Builders will build what's most profitable to them: large houses on small lots in the middle of nowhere, where land is cheap.

[geckosfeet]

23. Bulldozing? These are ready made homes for the homeless. If the government

owns them (that's us in theory), and there are people on the streets, I say we convert them to low income and assisted housing.

[fudge stripe cookays]

30. The only way that can be effective...

is if all of the places where those homes sit develop the public transportational infrastructure for those homeless or disadvantaged people.

Many/most of these people do not have cars or other methods of transportation to even get to a job or nearby stores. And try fighting the asshole conservative NIMBY contingent in the suburbs where most of these developments are located.

I'm with you. I think it's a wonderful idea. But the obstacles are in place, and the obstructionists would put up a fierce battle.

I was recently informed that that is why Waukesha County here in Wisconsin does not want public transportation. Because "those people" will be able to take it to come out to the suburbs and rob people.

:eyes:

[customerserviceguy]

34. You've made a good point

turning McMansions into duplexes and triplexes, and turning failed single family residential tracts into low income housing will get a LOT of resistance from the folks living nearby who are still able to pay their mortgages. But if something's starting to run down to the point where these places are becoming drug dens, I cannot imagine that nearby homeowners prefer that any better.

[hunter]

26. Sorta like the Grapes of Wrath, eh?

Farmers destroying produce to "keep the prices up" while people starved...

[undeterred]

11. Or get rid of those extra homeless people.

:sarcasm:

[snappyturtle]

4. What gets me is that those who are making the decisions of what to do

next are seemingly over looking the housing sector. This sector is what kept the economy alive many quarters. When they argue about whether to pump money into the Big 3 automakers they purport that if they don't, many will lose jobs...true. But think about the job loses with housing. Look around your home. The windows, heating and cooling systems, windows,plumbing besides the contractors and builders,etc. would in my thinking account for a greater number of workers than automobiles. Much more goes into a house not only when it is first built but for maintenance than automobiles. Auto depreciation we all understand but house depreciation is a killer. People invested in their homes as many invested in the stock market. The powers that be need to address housing. This is on top of techniques to keep homeowners in their homes with refinancing. imho

[all.of.me]

6. And in the real estate industry itself...

... there are realtors, title companies, mortgage brokers, home inspectors, septic inspectors, appraisers, attorneys, and contractors and all that entails, like you said above. We are at a standstill, mortgage brokers are closing, realtors are getting full time jobs, inspectors are looking for other work, office help is getting laid off. It's huge!

[snappyturtle]

7. I KNOW! & agree! When you really stop to think about it, the housing

industry is enormous. When I think about autos and parts (many foreign made) and service people and dealer ships, I realize it too is big but I don't think it's as big. It's that bignessof housing that kept the economy afloat a long time when other sectors like manufacturing and technology were slumping. But what do we know? We just live out here in the boonies of consumerland...ha! I doubt they will ask my opinion!

[customerserviceguy]

35. Been there, done that

I worked for over two decades of my working life in title insurance. Times got tough when the boom crested in the summer of 2005, I haven't been able to get work in that industry ever since.

Also, housing starts provide employment for the appliance and furniture industries, as well. No doubt they've been hurting in the current climate.

[Waiting For Everyman]

10. It's 40% of the economy, directly or indirectly.

That's why we're having a problem, RE is a downward spiral affecting everything else. All for the banks to have what they want. What we have, are overpriced loans. Not just subprimes, but people who have been MADE subprime by this. People who have lost jobs, people who had a divorce or chronic illness or death in the last few years, people who had to move for whatever reason but couldn't sell because the market disappeared.

Other prices are falling, but mortgages to anyone who EVER had a problem have gone UP, trapping them in an impossible situation.

We are eating ourselves.

Housing has to be FIRST. NOW. And it has to be at a cut-rate from what the banks are demanding. We gave them this huge bailout, we should think of that as a BUYDOWN for everyone on every kind of debt. If that isn't done by law, it won't happen.

Then, loans would start being paid again - when they get REAL about the terms. It should be one mass negotiation for everyone - new law. Then we'd get a starting point, to rebuild from.

[snappyturtle]

18. Absolutely! I agree with everything you have said. If only foreclosures

were stopped and loans refinanced, not just those in foreclosure but also those with high interest rates(and there are those too!) and those with ARMS....why can't the terms be extended five to ten years with a modest interest rate? Banks would STILL make money, halt costly foreclosures and stop the skid of housing values in neighborhoods with foreclosures. If these things happened homeowners would have a little extra to replace the outgrown clothing of children, tires for their cars, etc. and the economy would be stimulated if JUST the banks would re-write mortgages. Remember, some of the greedy in the finance area betted on home owners not being able to fulfill their mortgage payments and passed the looting on so others could go along for the ride! It must stop.

[Lugnut]

13. A friend of mine lost her job last week.

She worked for an exterior door manufacturer for 15 years. Homeowners aren't remodeling and new homes aren't being built so she's been permanently laid off.

[snappyturtle]

19. I am sorry to hear this. It is another example of trickle down economics!

I wonder how Andersen windows, Marvin widows, Pella windows and Jen-Weld windows are doing? I have been to the plant of Marvin in Baudette,MN...I can only imagine what it looks like today. How about Caterpillar and other heavy equipment companies? The housing sector must be addressed....tomorrow but I doubt that it will be. No one can tell me these economic gurus don't know all of this and choose not to address it. We have to ask ourselves, why?

[nichomachus]

9. Really? Falling? Then why did I just pay 20 percent more than usual at the store

for groceries. I almost had sticker shock just buying basics.

You have to remember that the consumer price index isn't based on anything that people buy on a daily basis. That's one of the legacies of the Bush Crime Family.

All the numbers have been cooked to a sludge.

Grocery, fuel, health care and other prices will go up. The CPI will go down. And, when things like Social Security benefits are calculated -- pegged to the CPI -- people will not get increases to match the cost of living.

My Medicare Part D just went up 24 percent. My SS check just went up 5 percent.

[all.of.me]

16. I'm curious to see if food goes down now that gas has gone down. Hmmmmm...

I was at Wal Mart the other day. I need bubble wrap. Not long ago, say within the last year, it was 1.97. Now it is 4.00!

If gas has been the excuse/reason for high prices across the board, then as gas comes down, it all should. Let's see if that happens.....

[EverHopeful]

22. sticky prices

is the phrase I've heard used when the price of something stays high even after the reason for an increase has been eliminated--so all those price increases we saw because of the high oil prices will probably stay high. I think the NY MTA prices have always been sticky--one fare increase was based on a falsely reported deficit but the fare increase stood even after the inaccuracy (fraud?) was discovered.

[nodehopper]

24. not only after it was discovered

but after a judge ordered that the fare hike be rolled back...

...it wasn't.

[Thothmes]

25. Do not look at the price of gas to determine

if food prices will come down, look at the price of diesel fuel. Almost everything think that gets transported in this country is carried by machines that use diesel fuel.

[all.of.me]

31. That's true. nt

[fascisthunter]

28. Shit... prices for consumers have gone way up in comparison to our incomes...

in the last twenty years or maybe longer. Now because of inflation due to feul prices and this fucked up Friedman-BS economy... well, you already know.

[BlueJazz]

15. Mighty Damn Funny...Everything seemed OK until those Democrats got Elected.

(Had a customer of mine say that...I rebuilt his Computer)
If I had not been in his home, I would have told him to stick his Rebuilt Computer where the sun don't shine.

[icnorth]

20. Shell game: the subprime mortgage swindle

SNIP:
The best concise description I have seen of what actually happened appeared under the joint byline of Robert Winnett and John Arlidge in the March 15 London Daily Telegraph, an ancient and reliably conservative newspaper favored by the financial community in the City of London. Allow me to quote a longish bit of what they wrote:
Unscrupulous lenders in America had lent billions to people with dubious
credit records. The mortgages were typically offered at attractive
knockdown rates for the first few years, after which the monthly
payments rocketed. Tens of thousands of people were unable to
repay their mortgages and faced losing their homes ...
The subprime mortgages were in effect sold on by the lenders to
investment banks that "repackaged" them into complicated financial
products. The poor subprime mortgages were split up and merged with
other kinds of debt and then repeatedly sold on. A wide array of other
financial products was then devised by some of the world's best
mathematical brains to profit on slight movements in the price of the
bonds and other investment schemes devised by the investment banks.
The whole system--driven forward by investment bankers competing with
their former colleagues who had joined hedge funds--resulted in an arms
race to devise the most sophisticated schemes and ways of cutting up the
different kinds of debt .... fail] no one knows who owns the bad debts, trust is destroyed, and even
top bankers have to admit that they have no idea exactly how the system
works or what they have invested in.

Please note that the crisis arises not from debt, not even bad debt, but from speculation in debt. The original lender in many cases knowingly made the bad loan for the sole purpose of creating debt that could be sold at a profit.

http://findarticles.com/p/articles/mi_m1252/is_/ai_n29481716

[givemebackmycountry]

21. Remember this simple fact...

Republicans are good for the economy.
Got to keep those "tax and spend" liberals out of office.

Thank you Monkey.
You and your boys did a hell of a job for the past 8 years.

On January 21st, the first Republican I encounter that says how bad the economy is under President Obama, is going to be doing two things immediately.

Running around in circles, and trying to stop the bleeding from their broken nose.

[hunter]

29. I doubt anything ever gets back to the way it was, "corrections" or not.

The plane that was flying high from the 'fifties until now is bouncing along the ground and big ol' chunks of it are tearing off. Nothing's gonna fix it.

Assuming we don't start tumbling or burning, when the wretched thing comes to a rest we'll crawl out of the wreckage and walk into the 21st century like all the other nations.

I hope everyone is wearing comfortable shoes.

[daggahead]

39. Can we say that the frog is now boiling? n/t