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This may be the most important housing chart of springtime 2021

This may be the most important housing chart of springtime 2021

My longform housing market analysis is almost complete, and will probably get posted later today or tomorrow at Seeking Alpha. I’ll post a link here once that is done.

In the meantime, consider the following. The Case Shiller national house price index had another sharp increase in February, and is now up 11.2% YoY, the highest rate since the days of the housing bubble in 2002 (green in the graph below):

Meanwhile, look at inventory (gold). In absolute terms, the seasonally adjusted inventory of new homes for sale bottomed last August and October. Last August inventory was down -12.3% YoY. As of last month, it was only down -4.6% YoY. At this rate of change, it will be *up* YoY by about May.

Strength in housing and cars, oh my!

Strength in housing and cars, oh my!

The two consumer goods which turn down before recessions, and up before recoveries, are houses and motor vehicles, in that order.
Since January housing permits and starts came out yesterday, let’s take a look at both.

First, while housing starts retreated slightly from their December levels, the more leading and less volatile permits, and the even less volatile single family permits, both made new 14 year highs. The below graph normalizes all three series to 100 as of yesterday’s report, better to show the long term context:

Starts were not so high as in prior booms, but permits were higher than at virtually all past periods except for the early 1970s and the early 2000s bubble.

Dutch Domestic Demand Dragging Real Home Values

by Rebecca Wilder

Dutch Domestic Demand Dragging Real Home Values

Today Statistics Netherlands (CBS) warned ”House Prices Nosedive“.

Prices of existing owner-occupied dwellings sold in July 2012 were on average 8.0 percent down from July 2011. This is the most substantial price drop since the price index of existing residential property was first recorded in 1995.

In real terms and indexed to 2005, home values are down 10.1% over the year in July and dropped 21.3% since the August 2007 peak.

What explains this real depreciation in home values? I’ll give you one chart: the unemployment rate.

The labor market is sinking, and taking with it household demand. Companies probably hoarded labor in the crisis – the peak to trough drop in GDP was 4.9% versus a 1.6% cyclical drop in employment around that period. However, in late 2011 employment peaked and unemployment is surging – the quarterly employment data through March 2012 indicate a peak was seen in Q3 2011.
On balance, the downtrend in Dutch home values is probably here to stay. FYI: the balance sheet of Dutch households and non-profits is roughly 2.5 times levered.

Rebecca Wilder