It'll be interesting to see the government inflation numbers tumble as rents tumble (inflation calculation uses rent, not cost of home ownership as HP'ers know).
It's also amazing to me to see homebuilders still pumping out homes into the middle of the biggest housing crash in US history. I guess they just can't stop this crazy thing.
This should also show you the kind of crazy markup and margin they were making during the bubble that they can still put up a house, add $100,000 in incentives, and still eek out a profit.
Existing homedebtors are screwed though, as homebuilders can cut to the bone or even deeper, and are putting up new homes to put out onto the market at the new lower prices. Desperate Homedebtors will have no choice - they'll have to follow the builders down.
Here's the latest on the soaring vacant homes and crash underway:
Number of vacant homes for sale surges 34%
WASHINGTON (MarketWatch) -- The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday.
A year ago, 1.57 million homes were vacant and awaiting a sale.
The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.
"We have more than a million housing units of excess supply," said James O'Sullivan, an economist for UBS. "If you are looking for evidence that the worst is over for housing, you're not going to find it in this report. This argues that housing starts need to go down more."
In the past 12 months, housing starts have slumped 18% to a seasonally adjusted annual rate of 1.64 million.
In 2006, the number of housing units in the United States rose by 2.14 million, or 1.7%, to 126.7 million. The number of units occupied, however, rose by less than half as much -- 1.04 million.
Meanwhile, the homeownership rate (the percentage of homes occupied by their owners) was essentially steady at 68.9%, the government said, close to the all-time high of 69.3%.
With so many vacant homes for sale, owners will begin to offer them for rent, said Asha Bangalore, an economist for Northern Trust. If the supply of rentals rises, rental prices should begin to come down, helping to bring down core inflation. Read more on the rental market.
February 06, 2007
Vacant home rate soars (fastest ever), millions of homes unwanted, millions of new homes still going up. Oh, this is gonna get ugly.
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James T made it with everyone one of those Tribbles...
In one of the most popular neighborhoods in Denver I can pay $1500/mo rent or buy for $2500/mo for basically the same home. Now rents are going to go down....
Greg Swann says that means housing prices are going to go up.
Keith, we are just barely getting started. My "back-of-the-envelope" calculation, factoring in all the sub-prime borrowers, the flippers, the "Alt-A's", and all the poor schmoes who are gonna get thrown out of work as the bust continues, yields a much, much larger number of vacant homes that will be dumped back on the market.
Like, say, five million.
Or more.
Indeed, "tribbles" is a perfect graphic to use, as the homes that the (new term) "ho-moaners" thought were theirs pile up to the sky.
However, as I have stated over and over, look for the Fed/feds to step in and fight this bust with every trick in their book.
Senator Christopher Dodd is holding hearings this week on the REIC industry and how all the sheeple have been "victimizaed", so look for the "Anti-Terrorist-Ho moaning-Sheeple Protection Act of 2008" to follow, whereby "RTC II The Sequel" is created to absorb the millions and millions of homes stuck rotting in the elements--all at taxpayer expense of course.
Also, look for the Fed to panic and cut interest rates back to virtually zero, allowing the REIC to once again churn all the ho-moaners into new, lower-rate loans (again subsidized, in this case by the savers who will be cheated out of reasonable interest rates), which will STILL be defaulted upon eventually.
Finally, look for the class-action lawsuits to "Save the Sheeple" from the corrupt mortgage industry, with multi-billion dollar settlements paid by...yes, that's right...the taxpayer as the mortgage companies cannot pay up and go bankrupt.
This is turning into the worst nightmare one could imagine and it won't be finished playing out for another five years at least.
Franklin D. Roosevelt
Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.
I think you people have it all wrong. These builders are creators and preservationist. (There own job, at the expense of the shareholders.)
Some condos currently in the pipeline will be finished and become rental apartments instead, Obrinsky said, a trend that some are calling "reverse conversion" or "re-partments," he said.
But the number of new apartment buildings that come online in 2007 won't be staggering, he said. There just isn't an earth-shattering need for them -- yet.
"No one is pointing at the (rental) market and saying that we need a huge burst of construction because of demand," he said. "This will be a good year, not a great year."
If you don't buy, the gubbermint will buy for you. They'll be giving them away before long. Gubbermint cheese, only this time it's houses.
There was a previous post about the first bank failure a couple of days ago. Check out the implode-o-meter:
http://ml-implode.com/
Thorough article on iTulip:
http://www.itulip.com/forums/showthread.php?t=883
Rental on my street for $2100
http://lasvegas.craigslist.org
/apa/266818151.html
My total cost for PITI: $1800, $1550 with tax deduction.
Someone please explain to me how I would be better off renting.
How long before we get a picture of Geordi, standing in front of the Warp Core with visible gas billowing out, telling Captain Picard, "We have a Warp Core breach!" I guess that will come when the equities markets realize the gig is up, and "Sell, sell, sell!!!" becomes the slogan of the day!
Check out Spock!
He's looking for evidence of the Captain's DNA...
you mention the gubments inflation numbers, that is REALLY interesting. Let's see, rent plumets and the CPI drops. Iran has some "big news" on Feb 11th and Russia just so happens to be sending a number of senators down there at the end of Feb... OIL rockets to over $100, BUT rents are down and WAALA, there is NO Inflation, x energy.
Condo complexes are going like mushroms in my area,at night there is no light on the windows.
Most of them are going 250-400 K $,built for temporary employed nation by Manpower and such!
Disaster is looming.
Most intelligent comment was quoted in WSJ yesterday - "in a traditional maket, one sells a home and buys another home to live in, thus we have an orderly market. . .in this market we have a million homes for sale and the sellers are NOT buying a new home."
Anon said:"Rental on my street for $2100
http://lasvegas.craigslist.org
/apa/266818151.html
My total cost for PITI: $1800, $1550 with tax deduction.
Someone please explain to me how I would be better off renting".
$2100 sounds expensive for Vegas!
This house will not rent for $2100. Its a flippers "Fantasy rent amount" not reality. Watch and see this property sits vacant up until it goes into forclosure, and more homes go up for "rent" for alot less.
Class action lawsuits have already begun.
Chevy Chase Bank Faces Suit Over Adjustable-Rate Mortgages
http://tinyurl.com/2yhvun
El Qweefo,
Rents are NOT going down.. if anything they will be going up.
(I understand your logic about sooo many houses being avail which adds
Rental inventory, hence putting pressure on Rental prices)
You see, rents have been flat thru ought this entire housing bubble mostly because many renters were buying houses.
1) most people / builders would rather loose money then being a landlord (sell for a loss before renting)
2) Young people the normal rental population will be back to renting
3) Overwhelming majority of houses built during the bubble were single family units.
4) Single family units have a high vacancy rate( owner must pay expenses while place is not producing income)
5) Even if all condo conversions go back to rentals there will still be a shortage in multi family tenements.
6) There is practical no land zoned for multi family dwellings
There will not be a ‘Renting bubble’ coming, but just like housing needs to come down to normal levels Rents need to begin getting back to normal small increases
To meet normal landlord inflation.
Condo complexes are going like mushroms in my area,at night there is no light on the windows.
Most of them are going 250-400 K $
That cheap, huh?
Where I am (Anaheim, CA, behind the Orange Curtain) it's $400K-1M for a zero-bedroom, two-bath "Loft Condo" (TM) with granite countertops, stainless steel, and NO bedrooms.
Qweeferoni,
Are you a trekkie? Why doesn't that surprise me.
Anaheim, CA, behind the Orange Curtain
------------
Is everyone in Ca. behind a "curtain"? Here in Humboldt it's the Redwood curtain.
Rental rates will go up because realtrolls and flippers will wish them up
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