And even more on housing <g>!
In this previous post, I pointed out that the rental vacancy rate nationwide had moved up from a normal 7.8% (for the 90s) to 10.2% in the 4th quarter 2003. Obviously, due to the low interest rates, people are moving from renting to owning.
Message 19887224
This has placed an extra 800K rental units available nationwide (above the normal percentage for the last 20 years). This has happened in the last 3 years. We are already seeing rents decrease in the west to counter there high vacancy rates.
For other reasons, another 700K housing units are sitting vacant above the normal percentages. These are included in "bought but not occupied yet" and "other vacant" categories. This is interesting, and disturbing. Could this be speculation?
My primary source: census.gov
In this other post, I pointed out that we are currently building more housing units than we need.
Message 19887880
All of this points to a simple fact: right now, there is significant overcapacity in housing. Of course this assumes all housing units are equal, and ignores 1) "own" vs. "rent", 2) location, and 3) unit characteristics.
Still, to return to normal rates of idle housing units, we probably need to cut construction in half (from 1.8 million units/year to 0.9 million units/year) for about the next 4 years to rebalance demand with housing supply.
When will the housing boom end? That is the important question for investors. I argued earlier that it will not end like a "normal" housing recession (i.e. with rising interest rates). This is a bold statement and is contrary to housing history since WWII. Therefore, I could very easily be wrong.
If I am correct, the main question is timing. I tried to address the timing issue in this post:
Message 19885109
Best to all. |
