I’ve heard and read several variations on this theme today, that new residential construction is down.
New residential construction dropped in June, another indication that the U.S. housing market is struggling.
But that’s a new kind of sentence fragment – you know, where they leave off the important part. The rest of the sentence should read: to admit to itself that the last thing the housing market needs is a bunch of new houses.
“The housing industry remains stuck in a rut, with both sales and construction activity moribund,” said Michael D. Larson, an interest rate analyst with Weiss Research. “Builders simply lack the confidence — or in some cases, the financing — to ramp up construction, especially in the wake of the home buyer tax credit’s expiration.”
The poor report for housing starts follows news Monday that builder confidence in the new home market sank to its lowest level in more than a year, according to an industry index. Home sales plunged 33% in May, the latest sales figures released, and many economists expect a difficult year for builders now that the federal tax credit for buyers has expired.
This is news? That’s what’s holding them/us back, the expiration of the homebuyers tax credit? Sorry, guess again.
As a result, builders have cut back on home construction. “Builders remain very cautious in light of the sluggish pace of the economic recovery and the hesitancy they are seeing among potential home buyers,” National Association of Home Builders Chairman Bob Jones said in a statement.
What’s more, builders who can work up the confidence to take on new projects are finding it increasingly difficult to get financing. “If you think it is hard to get a mortgage to buy a house, put yourself in the shoes of a developer trying to throw up a subdivision,” Larson said in an interview. “It is really tough to get that kind of financing.
Does anyone ever think to ask why would they want to throw up a subdivision? Because that’s just what they do is no longer operative, developers. Wake up. We don’t need a lot of new houses and condos right now or for the next 12 1/3 years (random). This is again, one of the definitions of insanity – doing the same things over and over but expecting different results. Put on some different shoes, developers. Those have worn holes all the way through to the top. It’s tough to get the financing because we don’t need any more (single family) houses in (far flung) places where we don’t already have too many of these. You can look it up.
Developers: keep your careers if you must but change your MO. Walkable, to work and for provisions, proximity to transit, high density. That kind of building comes back, someday. The other kind, not so much.