Archive | October 22, 2015

Long-term Trends

The recent economic crisis has made a mockery of the phrase “safe as houses”, but trends are making a turn. These days, investors in homebuilding and related industries are laughing all the way to the bank.

In August, the U.S. government reported that housing starts reached a seasonally adjusted 1.206 million units in July – the highest since October 2007. To understand why housing construction likely has a long runway ahead of it, independent of the rate and affordability angle, put that number into some perspective.

Since 2008, housing starts have averaged 791,000 on an annualized basis. Adjusted for population, that is less than half the amount between 1990 and 2007. That period encompassed the housing boom but also two recessions.

Even the latest figure is just two thirds of that pace on a population-adjusted basis. In other words, there is both significant pent-up demand from a long construction slump and still a significant gap between todays level and historical norms.

While a stock market storm may be unfolding, it looks like housing’s foundations look pretty solid.

Edited from the Wall Street Journal

© 2015 All Truss, Inc. All Rights Reserved.

mii tek logo for all trusssbca logo for all trussnahb logo for all trusstpi logo for all truss