by Calculated Risk on 6/17/2008 08:29:00 AM

Click on graph for larger image in new window.

The graph shows total housing starts vs. single family housing starts.

Both total starts and single family starts are at the lowest level since 1991.

Note that the current recession on the graph is not official.

Here is the Census Bureau reports on housing Permits, Starts and Completions.

Building permits decreased:

Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 969,000.
This is 1.3 percent below the revised April rate of 982,000 and is 36.3 percent below the revised May 2007 estimate
of 1,522,000.

Single-family authorizations in May were at a rate of 623,000; this is 4.0 percent below the April figure of 649,000.

The declines in permits suggest further declines in starts next month.

On housing starts:

Privately-owned housing starts in May were at a seasonally adjusted annual rate of 975,000. This is 3.3 percent below the
revised April estimate of 1,008,000 and is 32.1 percent below the revised May 2007 rate of 1,436,000.

Single-family housing starts in May were at a rate of 674,000; this is 1.0 percent (±9.9%)* below the April figure of 681,000.

And on completions:

Privately-owned housing completions in May were at a seasonally adjusted annual rate of 1,132,000. This is 11.6 percent above the revised April estimate of 1,014,000, but is 26.9 percent below the revised May 2007 rate of 1,549,000.

Single-family housing completions in May were at a rate of 869,000; this is 8.9 percent above the April figure of 798,000.

More on starts and completions later.

by Calculated Risk on 6/16/2008 09:47:00 PM

From McGraw-Hill via MarketWatch: 2008 Construction Starts Estimated at $558.5 Billion, Down 11%, McGraw-Hill Construction Reports

On Commercial Real Estate (CRE):

[T]he slower economy and tighter lending conditions are now causing [CRE] projects to be deferred, and the loss of momentum will take firmer hold as the year proceeds. For 2008, commercial building will retreat 8% in dollar volume and 16% in square feet. Stores and warehouses are the most vulnerable to decline in the near term, while lesser reductions are anticipated for hotels and office buildings.

This is similar to the recent CRE forecast from Wachovia.

by Calculated Risk on 6/16/2008 07:00:00 PM

Initially, in California, the foreclosure crisis hit mostly lower end areas. But the numbers are starting to grow in the more affluent areas now; like Orange County. Yes, many of these foreclosures are in the poorer areas of Santa Ana, but the problem is spreading (see photos earlier today).

Mathew Padilla at the O.C. Register has the story: O.C. foreclosures hit new record in May, break 1,000 in a month for first time

Click on graph for larger image in new window.

This graph is based on the DataQuick numbers from Matt's article.

The graphs shows the number of Notices of Default filed (NODs) and actually foreclosures per month.

Note: today was all housing for me. My earlier posts included comments from the NAHB conference call, the DataQuick numbers for Southern California, and more on the housing bust and worker mobility.

Also yesterday I posted another analysis of home improvement investment that might be of interest.

Best to all.

by Calculated Risk on 6/16/2008 04:09:00 PM

On Saturday I wrote about how the housing bust is impacting labor mobility. Here is some more ...

L.M. Sixel and Nancy Sarnoff have a terrific article today in the Houston Chronicle on how the housing bust is impacting the job market in Houston: Poor housing market takes many off the job market (hat tip slmortgagebroker)

Carole Hackett has some high-level management jobs to fill. But the vice president of human resources of The Methodist Hospital is having trouble because of the slumping real estate market.

Not in Houston, mind you. Hackett's problems are in Michigan, Illinois and Ohio.

That's because when Hackett identifies promising candidates for the vice president of quality and key nursing director positions, they can't move.
...
"My intuition is that the housing market crisis in the United States is greatly affecting labor mobility," said Barton Smith, director of the Institute for Regional Forecasting at the University of Houston.

As I noted on Saturday, from 2005 to 2006 (the most recent data), approximately 1.7 million owner-occupied households, moved to a different county or state in the United States. If approximately 1 in 8 households (the same proportion as with negative equity) will not accept a transfer now because of depressed home values that would be about 200,000 households per year that will be reluctant to accept job transfers.

One of the strengths of the U.S. labor market has been the flexibility associated with geographical mobility - households can move easily from one region to another for better employment. The housing bust will limit this flexibility.

by Calculated Risk on 6/16/2008 02:41:00 PM

O.C. Register photographer Eugene Garcia takes us on a tour of foreclosed homes in the O.C.: The real foreclosures of Orange County

Here are a couple of samples (photos used with permission):

My first stop is at 512 W. Camile St. in Santa Ana. This foreclosed 2 bedroom home sold for $585,000 in March of 2006. ... the starting bid is just $99,000. Hopefully they'll throw in some buckets of paint. But - hey- what's that passage down below? (see Eugene's photos for the answer)

This house sold for $585,000 in 2006?

NO AREA IMMUNE: Quite a change in environment here. This 4 bedroom, 2.5 bath foreclosure at 4 Langford Lane in Ladera Ranch sold at the peak in 2006 for $1,000,000. Neighbors said the last buyer owned a mortgage company that went under. Starting bid is $299,000.

by Calculated Risk on 6/16/2008 01:46:00 PM

From DataQuick: Southland home sales back to record low; median price slips again

Bargain shoppers helped push Southern California home sales higher in May compared with April - a normal, seasonal lift - but it was still the slowest May in more than 20 years. The median price paid fell a record 27 percent from a year ago, the result of sluggish high-end sales, more sellers dropping their asking prices and lenders selling off more of their aggressively priced, repossessed homes.
...
Sales of post-foreclosure homes continue to dominate many inland markets. Of all the Southland homes that resold in May, 37.4 percent had been foreclosed on at some point in the prior 12 months, compared with a revised 36.2 percent in April and 5.5 percent one year ago. Across the six-county area, these "foreclosure resales" ranged from 25.6 percent of resale activity in Orange County to 56.6 percent in Riverside County.
...
Foreclosure activity is at record levels ...

This is an REO market. Most of the sales activity is at the low end, and even the higher end areas are seeing substantial REO sales activity.

by Calculated Risk on 6/16/2008 01:00:00 PM

Paraphrasing: The outlook is grim. Congress needs to act "urgently". Americans are losing their jobs, losing their homes, losing their home equity. We need help!!!

NAHB wants a tax credit for homebuyers. Builders no longer asking for extension of Net Operating Loss (NOL) carry forward (this was getting too much bad publicity I think).

More: "Buyers are only buying for need (like relocations), not want." People can't move up - they can't sell their homes. Note: this is why the mobility issue I discussed last week is so critical.

"Activity so slow, companies aren't hiring any teenagers this summer."

Builder confidence hits record low.

The NAHB reports that builder confidence was at 18 in June, down from 19 in May. Usually housing bottoms look like a "V"; this one will probably look more like an "L". (this refers to activity like starts and sales, but will probably also be apparent in the confidence survey).

Click on graph for larger image in new window.

Current sales activity at record low of 17.

Chief Economist David Seiders: Expects further declines in new home sales. This survey was before the major run-up in interest rates. Interest rates is another threat to the housing market.

Caroline Baum Asks (my on the fly transcript):

"We've just been through the biggest housing bubble, housing bust in history. Housing is already tax advantaged. Why do we want to artificially stimulate demand when prices are still too high?"

More: Seiders still has sales at bottoming at the middle of this year. He now says risk to his forecast are to the downside - because of this HMI report and higher interest rates.

"Risk (for sales) are piling up on downside. Price erosion (for new homes) through 2009."
Seiders, June, 2008

by Calculated Risk on 6/16/2008 12:03:00 PM

National Association of Home Builders (NAHB) CEO Jerry Howard and Chief Economist David Seiders will announce the June Housing Market Index (HMI) results during the teleconference to representatives from the media and other interested parties on Monday at 1:00 p.m. Howard will focus on the policy side and will discuss the importance of passing economic stimulus legislation, while Seiders will analyze the June HMI numbers and explain how they fit into his overall housing forecast.

Members of the media will be given the opportunity to ask questions at the conclusion of the call. A press release and related data charts will also be released following the call, and will be posted at www.nahb.org/teleconference.

To participate in the call, please dial 1-800-860-2442 (toll-free) and ask for the "NAHB Housing Market Index Call."

If you are unable to participate in the teleconference, you may listen to a full replay of the call after the teleconference has concluded by calling 877-344-7529 and entering 420480 followed by the # sign when prompted for the account number. The replay will be accessible beginning at 4:00pm ET on June 16, and will available until 9:00am ET on July 1.

Source.

I don't know why they are holding a conference call. I doubt it's because builder confidence has improved - or why would they be pleading for help from Congress?

by Calculated Risk on 6/16/2008 08:59:00 AM

From MarketWatch: Lehman posts first loss as public company

Write-downs on soured debt securities and bad trading results led to Lehman Bros. Holdings Inc. reporting [a] second-quarter loss of $2.8 billion ...

A billion here, a billion there.

by Calculated Risk on 6/16/2008 05:00:00 AM

Alec Klein and Zach Goldfarb at the Washington Post present a three part series on the housing boom and bust. Here is the second part, The Bust, discussing the beginning of the housing bust. The third part will be released Tuesday.

On Feb. 27, [2007] ... Federal Reserve ... officials remained unruffled. They privately calculated that even if subprime losses were severe, the dollars involved would be no more than a blip in the overall economy. As late as June, Fed Chairman Ben S. Bernanke spoke via satellite to a conference of international economic officials in South Africa, predicting, "the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system."

Ahhh. Memories of containment.

The full series, with some interactive timeline and other resources is available here.

Note: Tanta receives a nice mention in the resource section.