2008: Worst Housing Production Year in Recorded History

by Will Smith

2008: Worst Housing Production Year in Recorded History

Morningstar has posted a video interview with Eric Landry, associate director of industrials and homebuilding at the investment services company. While the topic of housing starts and construction statistics might cause your eyes to glaze over, this particular video is actually not (that) boring — if only because the discussion is so dramatically bleak. For those without the time to watch the seven-minute video, see the key quotes we’ve highlighted below.

Key quotes:

  • “[In terms of new construction] 2008 will go in the books as the worst year ever. Until, that is, 2009 is put in the books.”

  • “Total starts [in 2009] will probably be lucky to be more than 600,000 units, which is a very, very significant number in the fact that never before have numbers that small been recorded. It’s not even close.”
  • “Traditionally, when [housing] starts fall to about a million units, that marks the bottom. It marked the bottom in ’82, ’91, the mid-seventies. Every single bottom has been marked by a million units of construction that year. This year in 2009 we’re looking for about 60 percent of that, if we’re lucky. Could be even lower.”
  • Is there any good news? “We’re going to have to fight through quite a bit of weakness over the next four, maybe six, eight quarters. Who knows. But on the other side there will be [pent-up] demand for housing.”

Landry also says that the national housing inventory number that will come out next week from the National Association of Realtors will be very telling. Root for the number to be under 4.2 million, which would indicate that the oversupply of housing is being sopped up by the market.

This article originally published at http://dc.urbanturf.com/articles/blog/2008_worst_housing_production_year_in_recorded_history/478

1 Comment

  1. CondoAuthority.com said at 12:26 pm on Wednesday January 28, 2009:

    Thanks for the heads up on the video guys.  It’s interesting that everyone (including Wall Street) is very discouraged when they hear that housing starts are down to historic lows, but in the same breath note the problem in the market place is over supply.  Housing starts hitting record low numbers is some of the best news we can ask for.  In fact, I would rather hear the number is zero.  I know this is tough for the home builders, their employees and other businesses that depend on them, bu the fact is that there were too many houses built in the last few years.  The sooner we can get back in balance the better and adding new supply is a big part of the problem.  Once we overshoot on the way down and prices start rising smartly again, household formation will begin and home builders will be back in business.

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