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Jan 22, 2009 -- A positive spin on the low home construction numbers
CLARKONOMICS: Home construction in December is at the lowest level it's ever been since stats started being kept in 1959. Only 500,000 housing units were built in the entire country during last month, according to new figures from the Commerce Department.
The home construction industry is in a depression -- and that's not a word to be used lightly. But Clark believes this is actually a good sign overall.
Our current real estate slump is partly related to a vast oversupply of houses. We have anywhere from a minimum of 2 million to a maximum of 10 million too many homes for our population. The level of construction was artificial and the high cost of housing was inflated by speculative buyers.
So this latest drop in housing construction is actually a good thing. It slows the runaway growth of extra housing and is part of the correction process for the housing bubble.
One last word of advice: Be realistic about your pricing if you're looking to sell your house this spring. Hire an inspector to vet your home; fix whatever they take issue with; and then make the inspection report available to potential buyers.
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
I own a townhouse in New Orleans, LA, damage interior by hurricane Katrina. It is paid in full, in a nice community. I moved to Houston, TX, recently bought a home. I want to repair this townhouse and lease it. My credit is good. Last year I had a decrease in my credit scores, due to a tax lien in California. I worked in California as a travel nurse 2004 to 2005. I failed to file the proper state tax, Nonresident status, in a timely manner. I had this corrected, but credit bureau reporting states " lien released/paid". This lowered my scores. This lien was placed in 3/2008 and released in 7/2008. The last few months my score has improoved to good status. Prior to this my scores was good to excellent. Please advise me on best source for this type of loan. thanks, Janet Francisco jybfrancisco@gmail.com
Clarkonomics
I haven't listened to the podcast but your numbers in this recap are wrong. That 500k number is an annualized number if that level was maintained for an entire year so the actual number would be roughly 1/12th or approx 42,000 units.
Trades
RLF - I sure hope you're right. My husband has been in the electrical business all his life and is still hanging in there but it's tough right now for everyone in the business. Hopefully things WILL get better.
Home Owner Insurance
Your home owner insurance is based upon the cost to rebuild, not the value of your home so it isn't completely tied to the value.
Second Homes
Way to many people were buying second homes they really could not afford. Flipping them and walking away as they forced the market up. Then it crashed. I've watched it here in CA. I used to do a lot of renovating and just repairs to these second homes. Now they let them go to disrepair. Had one customer with a major water burst inside the walls. At $40.00, per hour he said "forget it!" Used to be able to get $65.00. But all the laid off trades people are working for nothing. This has been going on since Summer of '07. I told my wife the that we were in a recession/depression. Took the government a few more months to figger that out...I think they said, "It happened around Dec. '07.
foreclosed homes too large, doug
"SO WHY ARE YOU BUILDING MORE LOW INCOME HOUSING??? YOU CAN HELP THE ECONOMY BY BUYING UP FORECLOSED HOUSE" I wondered the same thing, but when I asked I was told most of the foreclosures are too large and therefore unaffordable to maintain (which is true for a lot people, not just Habitat applicants). They are renovating some foreclosures though. Clark talked about the difficulty in getting volunteers for these projects, due partly to the nasty condition former "owners" left them in.
Housing
I agree with Clark. Building more houses is a waste of money with the vast amount of inventory currently on the market. You would be better off building an ant farm or termite factory. Especially since the termites/ants will occupy any new homes before any people will.
LOW INCOME HOUSEING
SO WHY ARE YOU BUILDING MORE LOW INCOME HOUSING??? YOU CAN HELP THE ECONOMY BY BUYING UP FORECLOSED HOUSES .DON'T BUILD MORE.NOBODY WITH A LOW INCOME BELOW 28000 CAN AFORE A HOUSE ANYWAY. DO THE MATH CLARK.MAKE SURE YOU FIGURE IN THE COST OF HEALTH INSURANCE.POOR PEOPLE MUST LIVE IN HOUSES OF AT LEAST 10 PEOPLE . OTHERWISE THEY HAVE NO $$$ LEFT FOR MEDICAL EXPENCES. BUT THEY USSAULLY JUST STIFF THE HOSPITAL AND TAXPAYERS AND OTHER PEOPE THAT HAVE INSURANCE MUST PAY HIGHER PRICES I THOUGHT THAT YOU WOULD KNOW THESE THINGS .
Home Owner Insurance
Since our home values have gone down, shouldn't our home owners insurance also go down?
Trades
Judy - There is/was also an over supply of tradesman. Now the ones who did mickey mouse jobs and illegal work will be weeded out. So while short term there is no work for us...it's helping the long term for home owners and finding quality workmen.
The banks won't lend money, people have less equity, taxes are going up, jobs are being lost, and the government wants to spend trillions to "get the economy back on track". Instead of spending $7000 per man, woman, and child (so far!) on economic stimulus (read pork projects), if they let people keep more of their own money we would be able to create jobs, buy houses, and build new houses. It is such a mess and not likely to get better soon.
This credit mess has hit everyone, including those of us with great credit. We want a very talented, but slow working (solo) builder we like and trust to build our home, but banks won't give a loan for 2 years, only 1.
Low Home Construction
Clark, maybe you think it is a good thing but the construction crews, electricians, plumbers, painters, etc. who are out of jobs, and their families most assuredly DO NOT! And to ncsteve5, it is not these workers fault that the woodlands are being destroyed. They would work on a school just as hard as a house if someone would build one.
Housing
I live in an area of the country that has had extremely poor leadership when it comes to smart growth, we have overcrowded schools, roads etc.. The only thing the govt can do is keep allowing massive subdivisions to be built, meanwhile 50% of the elementary school kids are in trailers. I hate to see people out of work, but am estatic on not seeing as much woodlands destroyed.
WHAT???
What the hell difference does being white, black, brown, yellow, or purple with pink poka dots have to do about working or a job?
Not so nice Robert Reich
I watched a video on Youtube from a congressional hearing involving Charlie Rangel and Robert Reich. Robert Reich said that new construction jobs should be given to people other than white workers. I am white and a former construction worker, and I may have to work in the industry again if I can not find another job. Thanks Robert. Go to Michael Savage's web page and see the video if you do not believe me.
