
US home construction surges 22.6%, third monthly increase - apsec112
https://abcnews.go.com/Business/wireStory/us-home-construction-surges-226-straight-increase-72440918
======
drawkbox
A bit misleading. New Privately Owned Housing Units Started have merely
bounced back to an already suppressed market from the Great Recession housing
bubble crash which hit all-time lows. [1]

Growth is good, return to baseline is good, but this was already a largely
suppressed market. Housing supply needs to improve much more than this to be a
major indicator of growth. We are currently at 1982 and 1991 levels.

New Privately Owned Housing Units starts are at all time lows historically on
average, again largely from the Great Recession. Good news, but not some
massive gain.

[1]
[https://fred.stlouisfed.org/series/HOUST](https://fred.stlouisfed.org/series/HOUST)

~~~
wheelerwj
still, who the fuck is buying these houses?

~~~
hadlock
People in their mid-30s who put off having kids and buying a house because
they couldn't afford it until just now. Bunch of people born 1982-1986 are
just now putting their lives together after riding out 2008. The 1984/5 years
were an especially large class. People 1982/3 are just now starting to age out
of their prime childbearing years ("biological clock").

~~~
Frost1x
I was quoted on a 30 year fixed rate mortgage at 2.62% APR with no pre-payment
penalty (locked in at the mortage dip). Plan to pay it off in a fraction of
the time, but it gives quite a safety net at such a low rate I couldn't pass
it up.

15 year mortgages were even lower (2.38% APR at the time) but I didn't want to
gamble too much with COVID uncertainties (for all we know this pandemic could
ride on 2-5 years).

If you're fairly financially solid and looking at real-estate, it's not a
terrible time. My agent also offered a COVID plan free which declares my
agent's agency will re-list and resell the property for me at no cost should I
desire within one year (obviously, I'd lose any difference in value should the
the market value decline, but if things get truly nasty, I can likely bounce
out before the market adapts given how quick sell turnover rates are here). No
closing costs would be charged under this case (obviously any require
renovations would be my liability).

I should add that my mortage will be less than what I'm currently paying in
rent... and in pretty solid tech hub that isn't SF.

~~~
jdhn
Damn, 2.62%? That's absolutely nuts. Makes me think I should look into buying
a house...

~~~
brlewis
That's not for sure. Low interest rates drive prices up or prop prices up. To
find the ideal time to buy you have to know the future: if rates are higher
than they're going to be, you can buy at a lower price now and then refinance
when rates drop. Of course, knowing if/when rates are going to drop is the
hard part.

~~~
Frost1x
This is spot on, housing prices around this area have increased in some cases
to insane levels but they were increasing already pre-pandemic.

Overall, with a lot of research and searching, I found a good buy under a very
special set of circumstances (at least I hope--there could be hidden issues
but I've been very thorough). Some other homes have inflated to ridiculous
price points around the area (as if they weren't already incredibly high).

It's always a balance looking at interest rates and price, so you have to be
careful. Also, there's nothing saying the pandemic won't completely gut the
economy and housing market in this area for years to come or even
indefinitely. It's possible rates could drop lower. I'm currently betting that
in the long 30 year run, it won't, for a variety of other situational reasons.
YMMV.

------
ngngngng
There are 10 homes being built within a quarter mile radius of me here in the
mountains of Utah. These lots have stood empty for decades, with one or two
homes going up per year. It makes no sense to me why they are all building
now. Two of these homes are literally some of the largest homes I've ever seen
in person. One is 10,000 sq ft, one is 20,000 sq ft.

Unfortunately, with very few exceptions, they're all being built by retired
"empty nesters". My wife and I are always hopeful that families with young
kids will move in so they can be friends with our children. But wealthy rural
communities are pretty inaccessible to young couples starting families.

Funny, while so many in this community are discussing moving out into cheap
rural areas, I'm longing for neighbors my age and friends for my kids and
weighing moving to a city.

~~~
JMTQp8lwXL
Empty nester or not, 20,000 square feet seems extremely impractical. How do
you keep it clean? Why pay excessive heating/cooling expenses? How much will
you spend on furnishings? Will you even use at least half the rooms on any
regular basis? Clearly, these homes aren't status symbols; as you mention,
they're in rural communities where nobody is appreciating them besides the 2
people living in them. Consider me quite confused as well.

~~~
notacoward
> How do you keep it clean?

Nobody buying a house like that does significant housework themselves. It
usually starts with a paid landscaping service, then interior cleaning service
(to clean furnishings picked out by an interior designer), then cooks, etc. I
know families who pay photographers to take regular "candid" pictures to post
on Instagram. I wouldn't be surprised to find out that at least one of my
acquaintances has hired a house manager to deal with all the other hired help.
And I don't know anybody in a 20,000sf home.

> nobody is appreciating them

Probably not the case. Or maybe day to day, but I'm sure they have plenty of
visitors whenever they want. This is also the realm of people who have at
least a 1/8 share of a private plane (including pilot) in their budget, and
fly across the country on a whim.

It's a very different world up there, where there's never any serious question
of _needing_ to work and money is little more than a way to keep score. Anyone
who doesn't realize we've _already_ returned to Gilded Age levels of
separation between the aristocracy and the rest of us hasn't been paying
attention.

~~~
throwaway0a5e
Maybe left coast money is different than east coast old money but you're
deluding yourself if you think that the waterfront houses on long island and
cape cod are (when occupied) visited by more than a maid and landscaper who
come by once a week. The kids run their own Instagrams. The interior "design"
is usually done by whichever one of the house occupants cares to do it.

~~~
notacoward
I did say "whenever they want" didn't I? Oh yes, look at that, I did. There
doesn't have to be a _constant_ stream of visitors for a house to serve a
purpose as a status symbol. An occasional visitor will do, as long as they'll
tell others what a fine place you have. Holidays are the true test. Magazine
photographers are also welcome, but won't be allowed to spend the night.

BTW, I live in Massachusetts. When you assume...

Edited to respond to parent's context-changing edit:

> The kids run their own Instagrams. The interior "design"

If that's the milieu you're thinking of, you're talking about something very
different than what either I or GP were.

~~~
throwaway0a5e
>I did say "whenever they want" didn't I? Oh yes, look at that, I did.

Forgive me for not seeing why how often someone entertains company is
relevant. That's more of a personal thing about how you run your life and
really has nothing to do with wealth. Some people have friends over all the
time. some don't. It doesn't really have to do with money. The idea of a
photographer (or influencer for that matter) sharing pictures of your house
would just be absurd to the overwhelming majority of these people. The only
context I can see it being palatable is if you just had some work done and one
of the relevant parties wants to take pictures for their marketing material.

I know it doesn't fit the "new gilded age" narrative you're trying to spin
here but these people live much like the professional suburban middle class
who live in the Boston and NYC areas. They just do it with stupid high dollar
amounts and without having to pick and choose where to be cheap. If they want
a $5k status symbol couch in their living room, they buy that. If they don't
care they go sit on the couches at some furniture store and pick whichever one
they happen to like.

>BTW, I live in Massachusetts. When you assume...

I'm a masshole too and I'm firmly of the opinion that it's not something
anyone should be proud of.

If you're so in tune with how things are here than why isn't your opinion
better informed? You're coming across as some Lexington Karen complaining
about those dastardly Kochs and Kennedys down on the Cape. The average pharma
exec or hedge fund manager isn't living in a different world. They're just
living in a more expensive one.

>If that's the milieu you're thinking of, you're talking about something very
different than what either I or GP were.

So then explain what you're talking about. I used to hang out with these
people (and still hang out with the ones I'm friends with). Based on my
experience your statements thus far contain overwhelmingly more falsehood than
truth.

~~~
notacoward
We're _clearly_ talking about different groups of people. You say "the idea of
a photographer" would be absurd among "these people" \- meaning people _you_
know, but I was pretty clear that I was talking about people _I_ know. Not
fictions. Real people, with whom I have shared drinks and laughs. Seems
awfully presumptuous of you to act as though your concept of "rich" must be
universal and others' lived experience with a different level of "rich" must
be imaginary. With your "left coast" and "Lexington Karen" stereotyping, it
rather seems that _you_ are the one who's talking about caricatures instead of
facts.

> I'm a masshole

I live in Massachusetts, but your statement also involves personality traits I
don't have. Please don't project.

------
crack-the-code
What really makes me concerned is what the after effects are going to look
like. What happens to housing prices after this is all over? When people
realize their impulsive buys were a mistake. When foreclosures and evictions
sweep the country. We are in this strange period where people are not yet
feeling the extent of the potential economic impact, and I fear for what will
happen in two or three years.

~~~
ramraj07
Why is it an absolute given that the economy is definitely going to flop? As
the days pass I'm convinced more and more that the general economy (and the 1
or 2% of people who are directly benefited by it) will do just fine, even
though the majority of the population is jobless and moneyless. This will
finally lay bare that the contribution from the majority of the working
population is quite optional for the GDP or any measure of economic
productivity, and push comes to shove, the institutions (factories, offices)
will start realising they can maintain or even increase productivity without
involving the majority of the population in the process. Hence the people who
have the money now (and are hence in positions that don't necessarily get lost
in this process) are likely to continue prospering, while the people who are
losing jobs and houses are never going to get them replaced.

~~~
bamboozled
No, the robots haven't taken over, at all.

The reason Apple's share price is booming is because "consumers" are buying
their products so their earnings were great. Many of them probably spending
printed stimulus money. Same for Amazon.

There is really no magic here except the illusion of unlimited money through
quantitative easing.

The QE is the only thing holding things together, if that stops, everyone is
going down the same drain to poop town.

Edit: I should also mention many investors are probably putting a lot of money
into Apple as it's seen as a safe haven for equities right now.

~~~
bsaul
side question , but do you happen to have any resources explaining what could
be the limit to unlimited QE and what precise series of event will be
triggered when that limit is reached ( knowing that everyone is doing the same
at the moment, from us to eu to cn).

~~~
bamboozled
Like the other poster mentioned, we don't really know.

I'm not an economist, just an interested investor and from my understanding,
using QE on this scale is just an easy short term solution to a longer term,
hard problem.

Printing money like this has never really been done before on this scale, but
the fear is that "printing money" like this will potentially lead to very bad
debt and hyperinflation inflation crisis (maybe already started).

The limitations of QE aren't entirely known, but will be known as more money
is printed and money becomes more worthless.

Will having a lot of "monopoly money" in circulation be a problem? Time will
tell; however there have been many examples where hyper inflation has caused
economies to fail, such as Venezuela recently and the Roman Empire in the
past.

The US Federal Reserve should probably be careful with their actions because
they wouldn't be the first country to run into dire issues doing this.

What I fear is, the people at the top of the US are blinded by greed and the
desire to be reelected and aren't concerned about the lessons of history.

~~~
dageshi
QE isn't really the same as direct money printing. Most of the money seems to
find its way into financial markets rather than directly into peoples pockets.
So people will see their retirement accounts or stock holdings doing OK and
maybe even cash some in to spend, or at a minimum make them feel comfortable
with their current level of expenditure.

But we've had QE for over a decade in various amounts and it didn't lead to
inflation, unless there's direct monetisation (the fed prints money and gives
it to the government to spend in an unlimited fashion) I'm not sure why the
situation would change.

~~~
seanmcdirmid
Inflation has been most focused in assets and investments. The government has
gone at great lengths not to count these in their inflation measures, but all
that QE going into stocks and housing bidding wars can’t be a good thing in
the long term.

~~~
cma
Housing is included in CPI.

------
code4tee
We’re going to see a lot of mathematically correct but potentially misleading
headlines as things start to tick back up during the recovery.

If you tell the average person “X dropped by 50%.” And then next month “X
surged by 50%” they’d think it dropped and is back to where it started, not
that in reality “X surged by 50% actually means it’s still down by 25% from
where it was.”

A lot of this going on at the moment giving either intentional or
unintentional impressions of what’s actually happening.

------
jb775
Millennials are over the inner-city lifestyle and are sick of paying rents
higher than mortgage payments. Seeing their cities destroyed and become more
dangerous over the past few months was the straw that broke the camels back. I
predict most large cities will get worse over the next 10 years as businesses
follow the millennials to the suburbs.

~~~
zeku
Sure I can see this, another thing is that cities suck in America. Just take a
vacation to Europe and just wake up and go get a coffee and live your life
getting around the city. Take the bus there and then come back to almost all
major US metros and try to take the bus. European cities also feel much much
safer, probably because the bottom 10% of their population in terms of income
have simple access to some kind of safety net.

We only have a small handful of cities in the country that can even compare to
this on any level. That's why young people would leave cities, because the
cities aren't built for living in.

~~~
refurb
NYC is one of those US cities where you can do this and people are leaving in
droves. Your hypothesis doesn’t hold up.

------
jointpdf
So this article doesn’t cite the original source, but I think it’s this (HUD
and the Census Bureau are part of Commerce):
[https://www.census.gov/construction/nrc/pdf/newresconst.pdf](https://www.census.gov/construction/nrc/pdf/newresconst.pdf)

This puts everything in much better context, especially the time series plot.
It seems home starts / permits were already increasing from July 2019 - Dec
2019, matching the July 2020 levels. So the better question might be: why that
surge?

------
aazaa
No mention of record-low interest rates on the 10Y and 30Y - held in place by
a Fed terrified of erring on the downside. Officials swear it's not yield
curve control, but of course it is.

There's nothing magical going on. Housing purchases are made with debt. If you
suppress the price of debt, you increase demand for houses.

Read some of the articles written about the real estate boom prior to 2008.
They also left out the minor detail of panicked policy makers juicing the
money supply.

~~~
jdhn
I don't see this changing no matter who wins the White House in November. I
used to laugh at people who said that the Fed was going to work at lowering
interest rates as much as possible in order to promote economic growth and
inflate away the debt. I'm not laughing at those people anymore.

~~~
selectodude
We've unofficially crossed the rubicon into basically what amounts to Modern
Monetary Theory. It's going to be an interesting decade.

~~~
eli_gottlieb
Nah, before it becomes _real_ MMT we have to actually keep up the trend of
taking the cheap money and spending it _fiscally_ , not just giving out cheap
loans. Right now we've got the HEROES Act stalled in the Senate and the CARES
Act has largely run out, so we're back to Great Recession era "haha money
printer go brrr".

~~~
cperciva
I'd go a step further and say that MMT is about borrowing for _structural_
deficits. There's nothing MMT about Keynesian stimulus in 2008 or 2020; where
things went off the rails was governments running large deficits during the
boom years of 2015-2019 (when they should instead have been saving for 2020).

------
marmshallow
Hotel renovations are on the rise too, according to my landlords who are
interior decorators.

~~~
just-juan-post
Now is an excellent time to do them. Travel is down and overall inconvenience
to guests is minimized (because there are fewer overall guests).

Had they the logistics I was hoping they would do more road construction
during March April May when traffic was almost non-existent.

~~~
godot
It's a good point but back in March the coronavirus was less understood. We
didn't know that they were less likely to spread outdoors. We didn't know if
the virus was really airborne or not. We didn't know masks helped because they
were commonly spread by droplets. (Ok, a lot of the world did, but America
didn't.)

If road constructions had to be done in groups (likely?) then it was putting
construction workers in front of an unknown set of risks. I think we
understand all those things a little better now so in retrospect it may have
been a good idea.

------
hanniabu
They didn't state any theories on why we're seeing an increase. Is it people
spending their vacation money on their home since they can't go anywhere? Is
it because they're working from home now and can't stand looking at that
fix/upgrade they've been putting off forever?

For those here doing work on your home, why now?

~~~
alasdair_
It sounds like it’s a big deal, and it’s been all over the media, yet US
housing starts are still below the levels seem in February 2020, so it’s more
a return to normal than anything.

[https://tradingeconomics.com/united-states/housing-
starts](https://tradingeconomics.com/united-states/housing-starts)

That being said, lumber prices are up 50% for just six months ago.

~~~
aaomidi
> That being said, lumber prices are up 50% for just six months ago.

How much of this is because of wildfires causing disruptions?

~~~
foota
I don't think there's that much logging in california, is there?

This site[1] has an outdated table. California was 6% of lumber production in
2015.

1: [https://oregonforests.org/blog/oregon-number-
one](https://oregonforests.org/blog/oregon-number-one)

~~~
nostrademons
The areas that are burning are not really large timber producers. The CZU fire
is largely in protected state & county parks. The SCU and LNU fires are
largely in ranch grassland & chaparral, frequently used for grazing cattle.
Christmas season may be a bust though - a lot of the Christmas tree farms in
the Bay Area are in areas threatened by the CZU fire.

Most of the timber production in California comes from way up north, in the
Eureka area and in the Sierra Nevadas. This area is somewhat resistant to
fires since it gets so much more moisture and precipitation.

------
baron816
Companies going public in droves. Surges in housing construction. What kind of
economy is this? The Fed may find itself needing to raise interest rates
before the end of the year.

~~~
dicomdan
US is reaching herd immunity so the markets are reacting. Plus, trillions in
stimulus spending.

~~~
totetsu
Did you see the man in HK who got infected again with a different strain? Herd
immunity will not come

~~~
nostrebored
Who was asymptomatic and previously did not have igg antibodies but had an
_expected_ immune response?

This is how the immune system works! Stop sensationalizing this story.

~~~
nickthemagicman
Thank you for this. People just look for reasons to be afraid.

------
spicyramen
People staying at home more time, want to improve their current space, around
my neighborhood people started rebuilding decks and doing remodeling. Local
home depot traffic defienetly spiked

~~~
Chilinot
Same in my country. There has been a surge of people at the hardware stores
buying supplies to repair/improve their homes as a way to pass the time when
you no longer can travel.

I guess they put their travel money into home improvements.

------
oxymoran
But this doesn’t fit the official doom and gloom narrative. The housing market
must be a giant casino like the stock market.

~~~
vsareto
If they built houses like they built slot machines, 80% of the houses would be
worth what people are actually paying for them

------
justinzollars
> interest rates are very low

I don't see how interest rates can ever go higher. We have been trapped near
zero since 2008.

~~~
cbanek
Well there's interest rates from the Fed, and then there's mortgage rates.
Since there's a higher default risk from mortgages than government debt, I
think housing interest rates could rise again, they are at historic lows right
now, although the fed funds rate as you say has been trapped near zero. While
the mortgage rate is usually tied in with the value of the 10 year bond, it
seemingly has done interesting things recently now that the 10 year bond is so
low that a bank wouldn't cover it's default risk with that rate.

------
RickJWagner
My wife and I started building a new house late last year. When covid hit
early this year, I really worried about how the sale of our then-current home
would go.

Luckily, the local real estate market stayed strong. We sold the house about
30 days before we moved into the new place in July-- above asking price! It
felt like a miracle.

It felt like the last parts of the new house took forever. Appliances, lights,
etc. took a long time to arrive. Window blinds took several months. (All this
affected by covid, we are told.)

I feel bad for people who have houses under construction now. I'm told the
wait for materials is much worse (!)

------
jungletime
Will this make a place like Hawaii that relies on tourism more affordable or
less?

------
learnstats2
Does this headline have a third derivative? Completely misleading.

