Remove 2007 Remove Construction Remove Sellers
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Single-family housing starts reach highest level since 2007

Housing Wire

Single-family housing starts continued their seven-month climb in November, coming in at the highest level since 2007, according to the Census Bureau. As a result of the pandemic, there has been a heightened demand for larger homes, which Kan said has driven more construction, home sales and mortgage originations. million starts.

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The homebuilders got lucky this time

Housing Wire

However, the glaring difference today versus the recession of 2008, is that in 2007 the builders had to deal with over 4 million active listings as competition for their pricey new homes. In an odd twist of fate, the delays due to COVID-19 are currently an infrastructure and jobs program for Americans in the construction industry.

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Comparing this housing market recession to 2008

Housing Wire

Part of the issue is that mortgage rates moved up so fast that many sellers quit this year as well. Key thing to remember: A traditional seller is also usually a buyer. When mortgage rates spiked up as much as they did this year, it wasn’t financially appealing to some sellers to purchase their homes at rates of 6.25%-7.37%.

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Purchase apps are at 2009 level: where’s the inventory?

Housing Wire

But we should ask: Why is inventory so much lower now if purchase application data is at 2009 levels — a period in time when inventory was rising noticeably in 2006, 2007, 2008 and 2009? Housing tenure ran at five to seven years from 1985-2007 and now is 11-13 years from 2008 2022. This is true except for one big reality!

Inventory 526
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Only 70,000 new homes available for sale

Housing Wire

This is different from the 2007 housing market when the builders’ sales were still collapsing and monthly supply spiked with rising cancellation rates. months and above, the builders will pull back on construction. The Inventory for homes under construction is 263,000 = 4.6 When supply is 4.4-6.4 When supply is 6.5

Inventory 525
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Homebuilders still need lower mortgage rates

Housing Wire

This makes them much more efficient sellers than existing homeowners, who need to find another house once they sell. 291,000 homes are still under construction: 5.7 The builders actually lucked out here because back in 2007, we had over 4 million active listings of existing home, which are usually cheaper than comparable new homes.

Mortgage 545
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New home sales defy recession calls

Housing Wire

They’re effective sellers and don’t want to create a backlog of completed units for sale because that would ruin their business model. In 2007, we had more than 4 million total active listings, which was too much supply for the builders to compete effectively. When supply is 4.4-6.4 When supply is 6.5