We'll Need To Build A LOT More Houses

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		Tech Entertainment Wall Street Markets Strategy Sports Lifestyle Politics Europe Video Latest Tuesday, December 20, 2011 We'll Need To Build A LOT More Houses Today's "strong" housing starts number has prompted people to ask a question that's been recurring for the past few years: Wait, why do we need more houses? Don't we have way too many? The answer is: Yes, we do need more houses. Or at least we will. While we did establish a pretty big glut of housing, a lot of that is in just a handful of "boom" states (see the bottom chart here). What's more, existing home inventory is definitely on the decline, as measured by the number of months of homes for sale. And finally, there's a demographic tailwind. The fact of the matter is that more people being born = more demand for houses, and we have a lot of catching up to do. The easiest way to see this is to look at housing starts vs. the total population. As bad as you thought the number was, it's actually much worse. In testimony in front of Congress earlier this year, Ivy Zelman of the respected Zelman and associates said: Currently, Zelman & Associates is forecasting 11% household growth for the current decade supported by 8% population growth, which I believe should eventually translate into a normal level of 1.4-1.6 million total housing starts per annum. For reference, in 2011, I estimate that total housing starts will be roughly flat from 2010 at 590,000 units. However, I expect single-family starts to hit a new post World War II low of 420,000 units, down 11% from 2010. To put today’s depressed levels in perspective, the current level of total starts would compare to 1.06 million in 1982 when unemployment was as high as 10.8% and 30-year fixed mortgage rates were in the 16-18% range. Bottom line: Eventually we're going to need a lot more houses. Read » Also On Money Game Today: A Clear Sign That This Is NOT The 'End' Of The Crisis STOCKS EXPLODE HIGHER AFTER MOUNTAIN OF GOOD NEWS: Here's What You Need To Know Oil Prices Head Back Towards $100 And The Oil Companies Love It Deutsche Bank's Retail Guru Makes 10 Predictions For 2012 Advertisement CHART OF THE DAY: Not Only Was Meredith Whitney Wrong... CHART OF THE DAY: Is S&P About To Make Its Most Embarrassing Downgrade Yet? CHART OF THE DAY: Forget The 200-Day Moving Average, Here's How You'll Know The Gold Bull Market Is Over Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: dwyld.kwu.jobhuntportal11@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

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