What’s the Sitch with the Housing Market?

We don’t work directly in the real estate realm, but occasionally our clients have a degree of exposure.  And recently we’ve seen some pretty drastic changes in company’s performance based on whats going on with housing.

2Q14 Data hasn’t been published by HUD yet, but take a look at the numbers through 1Q14.  Screen Shot 2014-09-17 at 11.22.01 AM

So what are we seeing here?  First, New Housing Starts are decreasing.  Single family starts are pulling down the average, declining 3.5% over the previous year. Homes under construction have increased markedly (21.1%).  What’s troubling is that the amount of inventory available is increasing – both new homes and existing homes.  Inventory of new homes is at 6 months… and bear in mind that increase in new homes under construction.  Those will translate into a further glut, right?

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How About the DC Market?

Just for fun we looked at data in our backyard in the DC market (data through 2q14).  Pretty well tracks the national market.

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What’s interesting in the DC market are the trends in all the other metrics.  Unemployment rate down? Check (5.4% to 4.9%).  The regional population is growing at 1.6% annually.  So while some signs are positive, there’s clearly something going on in the housing market.  Stuff to ponder.


 

* One thing that we keep coming back to: interest rates.  Mortgage rates tend to track the 10-year treasury.  As that rate has started to rise, look what’s happened to the re-fi market.  Boom.  Ouch.

 

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