Housing Starts Climb to Nearly 21-Yr High

[On the Road]

WASHINGTON (Reuters) - A jump in starts on single-family housing pushed total U.S. housing starts to a nearly 21-year high in January, but home mortgage applications dipped last week, according to data reported on Wednesday.

"U.S. housing starts unexpectedly rose 4.7 percent to a seasonally adjusted annual rate of 2.159 million units in January from an upwardly revised 2.063 million unit pace a month earlier, the Commerce Department (news - web sites) reported.

"The January total marked the highest pace of housing starts since February 1984 when they hit a 2.260 million unit pace. "Boom would be the most appropriate word for these housing numbers," said Patrick Fearon, economist at A.G. Edwards and Sons in St. Louis.

And note this from further down in the article:

"Separately, the Mortgage Bankers Association said applications for U.S. home mortgages decreased slightly last week as a drop in home purchasing activity offset an uptick in refinancing."

http://story.news.yahoo.com/news?tmpl=story&cid=564&ncid=564&e=2&u=/nm/20050216/ts_nm/economy_dc

Increasing supply and falling demand. You make the prediction.

[BlueEyedSon]

1. Yeah i see a crash coming, too bad you can't short real estate...

[On the Road]

3. I Think You Can Short REITs

I've wanted to do the same for the past couple of years -- not that it would have been a good idea.

I bought a home in late 1986 and watched prices skyrocket over the next year or so, only to come 2/3 of the way back down. Mortgage insurance was mandated because of the catastrophe caused by falling real estate prices, especially in overbuilt cities like Houston. No one today seems to recall those experiences or thinks they can happen again.

[Darkhawk32]

2. Clinton's fiscal responsibility allowed interest rates to plummet to ....

near nothing, thus allowing this real estate boom.

Watch the asshole Republicans try to take credit for it all.

Oh wait, they already have.

[Mikimouse]

4. I honestly hope...

that most people will not be suckered into buying a house in the near future. We could easily see the early 1980s interest rates again. I remember the days of 19% second mortgages and 18% first mortgages. If people think that those variable rate mortgages are going to vary but little, they will be in for an enormous shock. The financial institutions love it, of course, as it gives them the opportunity to foreclose and then re-sell the same property over and over.

[On the Road]

5. Oh, That's Right, the ARMs Will be Deadly

If interest rates rise, it will ignite a wave of bankruptices. How people got talked into those I have no idea. They were betting on no inflation over the next 30 years.

[BoogDoc7]

6. It's a...

Materialist thing...people buying stuff they can't afford...and stupidly thinking that the ARM's are going to stay down.

I'd like to see the numbers and dates, but I think that the interests rates started their dropping back in the mid-late 80s...

[On the Road]

7. Even in the Mid-90's, Rates were High

I remember getting 8.5% quotes in 1997. It makes a big difference in the mortgage payment. People have been put to sleep think inflation can't happen again.

[oecher3]

8. inflation can't happen again

... well as a current mortgage payer I would like seeing a bit more of inflation, that is not the problem.
But you are right the ARMs are going to kill people, as long as inflation won't adjust for their pay checks. HOWEVER, the way this is going right now, their are not going to be that many paychecks, because first their will be a shock sending even more into unemployment. Wonderful!
If inflation stays low that is when the real pain will start. So pray for a managable inflation increase with the interest rate hike!

[ArmHayseed]

11. HSH Associates

provides average monthly mortgage rates back to 1983 at
http://www.hsh.com/mtghst.html

Rates don't include points or fees.

[edhopper]

9. Very typical.

They over build into a booming market, therefore insuring oversupply. Resulting in a bigger bust.
Housing here in the New York area has gone up 100% - 200% in the past five years. It has grown 30% - 40% a year while inflation was at 3%. And people still say it isn't a bubble. When mortgage rates hit 8% it all collapses.

[FogerRox]

10. DO those figures count Permits issued or are they talking about

New construction Permits only.
1)Additions--require permits as do new houses.
2)Talk about average # of families owning houses---that # is BS.
The more 1% ers buying a 3rd or 5th or 7th house the more the
average goes up.
3)%of families owning a house is good- as is the % of Families NOT
owning a house. Those sorts of # are viable stuff to look at.

If the Numbers of HOme owners is realitivly static-- Mean price remains flat--BUT Average price goes up--then you know the 1 percenters are doing well with their 5th or 7th house.

ROj