Housing on the Brink?

I mentioned in this morning’s column that housing starts were collapsing in a federal report out Monday.

However, there’s no real clarity on where that’s coming from:  Could have been the spike in lumber prices (since passed) or it could be the change in demand from declining birth rates, or maybe something as simple as people trying to figure out how to make house payments if they take a bigger plunge.

So with this as background, on to the Case-Shiller/S&P press release just out:

“YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 16.6% annual gain in May, up from 14.8% in the previous month. The 10-City Composite annual increase came in at 16.4%, up from 14.5% in the previous month. The 20-City Composite posted a 17.0% year-over-year gain, up from 15.0% in the previous month.
Phoenix, San Diego, and Seattle reported the highest year-over-year gains among the 20 cities in May.
Phoenix led the way with a 25.9% year-over-year price increase, followed by San Diego with a 24.7% increase and Seattle with a 23.4% increase. All 20 cities reported higher price increases in the year ending May 2021 versus the year ending April 2021.

MONTH-OVER-MONTH
Before seasonal adjustment, the U.S. National Index posted a 2.1% month-over-month increase in May, while the 10-City and 20-City Composites both posted increases of 1.9% and 2.1%, respectively.
After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.7%, and the 10-City and 20-City Composites both posted increases of 1.7% and 1.8%, respectively. In May, all 20 cities reported increases before and after seasonal adjustments.

ANALYSIS
“Housing price growth set a record for the second consecutive month in May 2021,” says Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. “The National Composite Index marked its twelfth consecutive month of accelerating prices with a 16.6% gain from year-ago levels, up from 14.8% in April. This acceleration is also reflected in the 10- and 20-City Composites (up 16.4% and 17.0%, respectively). The market’s strength continues to be broadly-based:
all 20 cities rose, and all 20 gained more in the 12 months ended in May than they had gained in the 12 months ended in April. Prices in 18 of our 20 cities now stand at all-time highs, as do the National Composite and both the 10- and 20-City indices

What matters most, we think, is the shape of the curve of price growth.  Sure looks like inflation blow-off territory, to us:

Unfortunately, the home prices on a constant dollar basis are not provided.  That would be a reality check.  But since no one but us seems much interestedf in reality anymore…. Well, you get the point!

Write when you get rich,

George@Ure.net

33 thoughts on “Housing on the Brink?”

  1. Houses are still moving like hot cakes in my area. My former neighbor has been gone.

    Those new subdivisions I mentioned awhile back are sprouting houses like weeds. Cars are in the drives too. We’ve got to believe people live in the houses as opposed to contrived “Potemkin villages”.

  2. Housing still booming in central Florida – maybe a little off the red hot peak, but still very much moving – my home closes in about two weeks, and the closing date for my new home near Naples is still not solid as new construction is going on everywhere and I am sure there is extreme competition for labor and materials.

    Of course, the demand in FL is not really an organic thing per se – much of the demand is simply people that realize the northern and liberal states no longer offer a viable living experience. We are really in an amazing time period, as the government must double down on its tyranny to keep the covid con going. People will move anywhere they may need to – to try to mitigate some of the tyranny. Hopefully, this will resolve, but I don’t see that happening for now.

  3. Americans remind me of a story my uncle Harry told us years ago. They were standing at the window looking out at a severe storm. The storm got so bad that they could not even see across the yard. They heard a loud crash, and Harry said, “Lucille, this really a bad storm. If it gets any worse, maybe we should go to the basement.” When the storm was over, they looked out and a huge, three foot thick tree had been toppled by the storm and missed their house by inches. Later they learned a tornado had touched down about a hundred yards from the house.

    Think back ten years. What would have to happen that would motivate you to leave the USA? Well that has already happened, and more, but still there you sit.

    • Your point is made. But I am not willing to give up easy access to my kids and grandchildren. I certainly believe the US has seen its better times, but it is to much to give up to get a regular hug from my granddaughter, pick her up when she falls, get excited with her accomplishments. Those things cannot be replaced. Life is not without risk no matter where you live, but some things I would rather not do without, so we choose to live near our children and do what we can to hold off the collapse as long as possible.

    • “leave the USA”

      Where to go? When the $ does go over the falls the money streaming into the expat countries will stop. Now the expat countries have a bunch of broke “illegals”.

      There’s a lot of push-back in the U.S.A. for taking care of “illegals” and we’re rich!

      The poster above describes Southern living as the pinnacle Vs the broke North. A lot of the cash flow into the South stream in from Northern pensions. If the Northern pensions stop. Florida reverts back to a swamp.

      1970’s/80’s Detroit does show at a certain point people will just walk away.

      Good comment.

      • Where to go? When the $ does go over the falls the money streaming into the expat countries will stop. Now the expat countries have a bunch of broke “illegals”.

        It’s not just the money, Steve. Our society is an express train headed toward Marxism. Most of the Ex-Pats don’t realize when we go down the tubes the last adult will have left the room, and their own adopted country will be forced by politics and circumstance to follow us into the communist rabbit hole. Yes, they’ll have a few months before they hear the knock on their door, but once we’re in the crapper, there will be no place on Earth they can retreat to, to avoid that knock.

        Bush and Clinton will live free in Costa Rica, but they also have lifetime Secret Service protection, and the money to augment it with their own private army. Gates has his submarine, Musk will probably have his own self-sustaining space station before long, etc. We proles will have re-education and work camps and those of us who can’t do the work or refuse to re-educate will receive the 5¢ solution…

        As it has always been, so it shall again be…

  4. I work at a warehouse that sells construction related stuff. Sales are very low. And we we are out of a lot of stuff. Some products have been gone for a year. Make sure you have some stuff for potential maintainece projects cause many things are not being produced or distributed.

    • Yes, the China connection is being lost or at least vastly slowed down. That’s what happens when most of your capital goods are made in Asia, and China specifically. This could be a real ‘Apocalypse Now’ type of event in the near future. During the war years (WWII), we had lots of smart guys (collectively called the whiz kids during the war) that figured out how to make tons of stuff very fast that we as a country had not been making very much of (guns, air craft carriers, tanks, rations, uniforms, steel, and much, much more). We are now in that situation where eventually there will need to be a mobilization for America to actually make stuff that it consumes – the problem is that the smart guys with integrity are no longer here. Just a bunch of grifters on Wall Street and in Washington, DC.

      Could get interesting.

      • “We are now in that situation where eventually there will need to be a mobilization for America to actually make stuff that it consumes – the problem is that the smart guys with integrity are no longer here. ”

        Stephen..great post.. the last report I read years ago now had the time figured for retooling at 5-10 years.. at that time we still had a lot of those with the industrial manufacturing skill levels alive and willing to help. Those people with that skill are mostly all gone…the report on a potential emp gave a what ten year estimate for the components back ordered.. if.. those industries survived or we still remained customers of those industries.. at that time those companies had a back order of ten years. The estimate was society would be put back to the technological date around Noah or further..
        My thought is we screwed ourselves through greed in the search for higher profits..
        Most people don’t even know how to make a pencil..we are totally dependent on out technological advances..

      • Lol.. even IF we could make the guns ..the brass is made in a factory where.. what if.. every third shell casing was off just enough to make it jam?
        Our steel mills have been replaced by fast food shops.. our replacement parts are all made someplace else…
        A few years ago there was a report that missile guidance chips had been corrupted with programming that would allow another to take control on their destination targets..
        We are so screwed and we did it to ourselves..
        Our politicians let the representatives of the people be accessible by allowing the laws being fashioned written by organizations outside and not ever discussed or read.their votes and loyalty yo a few willing to give them money, gifts and travel an administration opening the borders to illegals and demonstrating that massive favoritism was rampant for politicians and their families on how they are treated with laws.. .. I think we are not only screwed but totally dependent on those that dont have our interests at heart.. but at this point we have to rely on them for our general survival and existence.

      • So true Stephen. Not only is there a dwindling labor and talent pool but, having sold off 90% of our machining, steel making and heavy industry capabilities to China and India; literally dismantling the ore-to-roll steel mills and shipping them overseas, we would be starting from scratch.
        The handful of millwrights that are left are in great demand, very expensive and largely aging out of the workforce. Can we rebuild with a woke, math deficient workforce that’s unable to sink a nail, let alone run a CNC shop?
        Much of our best remaining talent was in the oil fields but they have tired of being victims of the boom and bust every four years as our schizophrenic political system changed policy 180 degrees according to the coup de jour. No matter how skilled one is at a certain point you will tire of putting yourself and your family through the wringer. There is a hard working skilled mini workforce out there still, they are largely transient, moving from project to project, around the nation and around the world every few years.
        This deeply indebted, circle-jerk service / internet economy has painted into a ‘resources for export’ corner.
        The self important sociopaths in DC have no true interest in all this; it’s about keeping the minions calm while extracting what little wealth remains and acquiring a dacha to stay insulated from those smelly unwashed masses, at least until the next election season for most.
        It’s going to take an upheaval to get the US back in the game but I think I’d rather see that than a slow fade to black.

      • “tanks”

        Are wars still fought the same? When I was a kid I talked to a guy who worked a tank line back during WW2. He said at a certain point to improve tanks workers in the factories would “weld more plate here our boys are dying”.

        Today we’re involved with smart bombs and drones. It’s a little more complex than welding more plate steel around an ICE and two-tracks.

        Missile factories could continue to make missiles like F continues to make cars, putting them to the side waiting on chips.

        Nukes will be used way before anyone starts digging tanks out of the mothballs.

        EcuadorExpat makes the most sense. Get out of the way.

        But that has to be tempered with Joedish’s comment, “What, split and leave the everything?”

        We look to history. Most recently the Guats split and left everything. In the past Europeans split Europe and left everything.

        20 minutes after the Korean DMZ was setup people probably wished they did leave. How are the Hong Kongers feeling now?

  5. Ever wonder if 666 is not a number but rather, a series. One initial injection and a series of the same (boosters) … and mis-read as on the forehead or hand, but rather (between) the head and the hand (upper arm) …. ?

    “He who endures to the end, will be saved” …..

    Starting to look a little Biblical out there.

    • “Hmm.. now if they are revamping company ships.. will they still be able to supply the USA with the goods to keep everything supplied.“

      Hopefully, these corporate ships will be clearly marked … if not, even the goods being shipped might become targets. And will ANY of the civilian ships be trustworthy to come in to any ports? That could become very confusing. As if life wasn’t exciting enough.

    • You sent that link, what I saw was THIS link:

      The Turkish authorities are preparing 150,000 shelters in order to protect the population – mainly of Istanbul

      https://zf3scffcelivz62ejo5lsrme5a-jj2cvlaia66be-warnews247-gr.translate.goog/etoimazoun-150-000-katafygia-stin-tourkia-ekei-tha-sygkentrothoun-oi-tourkoi-se-periptosi-mega-seismou-i-enoplis-syrraxis/

      Erdogan’s Administration is ostensibly preparing ‘Stanbul for a 7.5 quake — ‘Thing is, you don’t go underground to shelter against an earthquake. You go above, and as wide-open, spacewise, as you can get. Also, Istanbul is built on top of the catacombs of Constantinople — an underground city that encompasses over 400 square miles of territory and ranges (mostly) from 40 to 400 feet below ground. Most Turks today don’t know of its existence, but it has stood since the beginning of the Eastern Roman Empire, so it’s probably seen a 7.5 already, and is still there…

      So… What I got from this wasL How many “Earthquake Shelters” is the United States (or Canada, or Mexico) building…?

      • “The Turkish authorities are preparing 150,000 shelters in order to protect the population”

        What I find curious is that the USA has bunkers for a few at the top.. I’ve been in a few back in the day when I wasin the military.. they are all pretty awesome.. BUT… just like the few at the top that are to precious to loose.. our country has spent billions preparing a shelters for the elite but haven’t invested in the adequate provisions for the citizens..
        Granted there’s some.. but I get the impression if your not invited then it’s a you provide for yourself..I see the bunkers as a tomb sd income enemies also know about the bunkers.. and not for the people..
        I am willing to bet the enemies know all of this.

      • AFAIK the two things the DUMBs lack is the ability to replenish their own foodstocks, and a means of disposal of dead bodies. A virus will go through a HEPA filter and a regen air system like sunlight through a sieve.

        When I was a kid, every public building had its fully-stocked underground fallout shelter. They’re gone now, and their supplies got parceled out under Ford, Carter, and Reagan. Russia has modern, fully-stocked bomb/fallout shelters for almost 120% of its population. We’ve got zilch. It’s like the EMP question…

        “Why…?”

  6. Portland OR suburb:
    I’m under siege from people wanting to buy my house: door knockers, postcards and letters plus phone calls. For Christmas, a real estate person dropped off a Christmas bouquet of flowers and a one pound box of chocolates. 4th of July I got a great door knocker saying “The Real Estate market is HOTTER than a FIRE CRACKER. Attached was 2 fireworks sparklers to “brighten my night.”

    Why? Who knows as my house is old and cheap. Maybe they think at 83 I’m senile and I will give the house away. Best I can figure is I have street frontage and two driveways. Probably two new 1300 sq. foot homes could be built on the lot.

    Next door neighbors were gone on a 6 week vacation, so I picked up their mail – absolutely received nothing from anyone wanting to buy their home. It has become like dealing with bill collectors. LOL

  7. I’m starting to think this is some kind of communist propaganda mill. I’m reading the (uninformed) comments above and wondering what country you are all talking about.

    LOTB, more like LOLROFL
    “at that time we still had a lot of those with the industrial manufacturing skill levels alive and willing to help. Those people with that skill are mostly all gone…The estimate was society would be put back to the technological date around Noah or further..”

    There are 18,000 CNC shops in the US. Plenty of talent is working today in the industry. Millions are being trained to work in it. I think we’re a ways away from Noah. Hyperbole much? Next… More LOTB nonsense.

    “Lol.. even IF we could make the guns ..the brass is made in a factory where.. what if.. every third shell casing was off just enough to make it jam?
    Our steel mills have been replaced by fast food shops.. our replacement parts are all made someplace else…”

    US gun makers and ammo makers are doing great. What planet are you from?

    This is from the brass industry, google is pretty smart about these things.

    “…2016 ahead of the presidential election, hitting a record 11.5mn units, according to the US Bureau of Alcohol, Tobaccos, Firearms and Explosives (ATF). Firearm production fell to a six-year low in 2017 of 8.3mn units after the election of President Donald Trump”

    We’re making 8 to 11 million guns a year. What about ammo?

    “NSSF estimates at least 12 billion rounds of ammunition are manufactured annually in the United States.”

    Rico says
    “Not only is there a dwindling labor and talent pool but, having sold off 90% of our machining, steel making and heavy industry capabilities to China and India”

    The US has been producing around 80 million metric tonnes of steel for more than the last decade. It’s not in decline nor sold off to anyone. Aluminum production nearly ended until Trump revived it with tariffs. While not fully recovered, the rebound in just a couple years underlines the top problem with all this thinking.

    Linearity. If you don’t understand Human Motivation and don’t understand how the US works, you think one year of decline is a straight line to hell. Then you bemoan how we “used to be so good”. What a bunch of hand wringing old ladies, no wait, that’s an insult to old ladies who are much tougher and smarter than these comments.

    Rico goes on with his delusion
    “Can we rebuild with a woke, math deficient workforce that’s unable to sink a nail, let alone run a CNC shop?”

    I just pointed out we have CNC shops from shore to shore, working 24 hours a day. 18,000 of them. And since you’re talking about workforce potential, you’ve probably not been around a school since, who was it, Noah? There is plenty of training going on every day, at every major college that I know of. How do I know this? I support the CNC software that EVERY MAJOR UNIVERSITY USES. Hundreds of licenses. Can’t drive a nail? These kids can make you a nail in 10 minutes.

    So Rico, and LOTB, you are out of touch. The US is tough, resilient, well equipped, able to produce, rebound, and resupply. With a workforce more than capable, with tools that grow ever more powerful each day. I’ll leave you with something real to chew on for a change.

    “Software is the only tool you use that gets sharper with every job” – Me

    There is no linearity in human motivation. (also me)

  8. You are proof that two people can live on the same planet, even the same country and be from different universes. Selling software to colleges and machine shops vs 35 years of contracting and fabricating for the chemical and mining industry can yield greatly differing perceptions.
    My daily interactions with industry personnel are clearly invalid, making me an ill informed hand-wringing ninny while your interactions with university administrators provides a clear air of superiority and absolute knowledge. Nonetheless, the actual steel industry statistics are that US steel production has dropped from 119 million tons in 1973 to 7.1 million tons in 2020-2021 (with the covid dropping us to 3.9 million tons/year production). The puts the US in 5th place worldwide with China at 119 million tons production last year. Much of our steel production tonnage is rebar and t-posts from mini mills like Nucor. So, beg to differ, we have lost our steel making capabilities and along with many other production capabilities.
    Our “tough, resilient, well equipped, able to produce, rebound, and resupply” country is at the mercy of foreign manufacturers and exporters who at the moment can’t get their product into containers. The orders we are placing today are subject to shipping and manufacturing delays from Asia that are about to have a real impact on supplies. Don’t listen to me though, just order a container shipment of any polymer (in quantity) and get quoted 2022 Q-1 delivery.
    I appreciate your optimism about the resilient, hard charging workforce we have and the great American spirit, I too believe that way. However, observations from my planet are very different from yours.

      • Good info. Most extracted resources are in greater than reported supply if the price is high enough to justify the mining and processing. The same concept applies to fracking; our reserves may appear to be dwindling but watch what happens at $200/bbl. Nonetheless, this a factor in our decreased production. I wonder what percentage of the ore was shipped to Asia.

    • Everyone in this country makes everything from US source steel, that is, until you ask for mill test reports, and find out most of the functioning foundries are in India and China. I too deal with this reality on a daily basis.
      Many of my employer’s suppliers dodge material source requirements by claiming they are “global” companies, and material source specifications don’t apply to them. Their products are sourced from multiple locations, and you get what you get. And if these brown-shirt companies are on a customer’s Approved Manufacturer’s List, they get away with it, regardless of sourcing requirements.
      Anyone who believes the US has a robust steel industry is basing their opinion on propaganda, not hands-on experience. Anyone can make up anything, and somewhere there will be a blue-ribbon assemblage of politicos endorsing the lie. That is what our system has become. Grab your ankles and learn to like it, because it isn’t going to get better anytime soon.

      • “Many of my employer’s suppliers dodge material source requirements by claiming they are “global” companies,”

        When I worked in the factory making cabinets.. (High end cabinets) that is where we got our materials as well.. from what I am being told it still is.. at that time a sheet of ply was ready for this.. .75 cents.. and sold for 50.00… I bought a bed set.. dresser w mirror highboy, two bachelor chest night stands a blanket chest and an armoire bed frame headboard and foot board for less than what I could go buy the drawer hardware for.. Now consider this.. the whole thing was made in china.. the wood was harvested in another country shipped to china where it was made then shipped to California from there it was shipped to us marked up and put on display I bought it at retail.. and furniture has on average a thousand percent markup.. so just how much did that dam thing cost. I know with c-pap machines.. the end cost here is a thousand plus plus the cost of the maskes.. before covid you could pick them up with free shipping a couple of masks extra hoses and filters for around a hundred.. now they are about three hundred and only one mask your choice.. If you can find them on the china sites..with covid a lot of those sales froze because of availability.. most of the time to buy your cabinets is cheaper than to go to the store buy the materials and make them..(unless your using cardboard..) I prefer making them its more fun..
        I got my sanding paper so now I can start on my violin.. LOL it is going to be fun.. did a lot of reading on construction.. did a lot of thinking and then I put it off because of fear of failure.. now I am going to go forward..

    • You are right Rico.. I actually hope and pray that Philistine’s optimism is what the future holds..
      Then I go to the store and here store managers talking about their inability to get merchandise and my fears are rekindled…

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