Posted on 09/25/2012 1:43:13 PM PDT by blam
On the flip side, Ivy Zelman, the best housing analyst on Wall Street (Forbes listed her as the most accurate analyst for any sector) called the bottom earlier this year and is calling for 965,000 starts next year. Inventory (including shadow inventory, new home and existing) has been declining for months and some are at historic lows. Builders are running out of existing finished lots in A and B locations are are purchasing raw land to develop. Demographics are driving the demand as household formation rebounded to 1.1 million last year after being down more than 50% of the 50 year average. Census estimates of 15-17 million new households between 2010 and 2020. Based on 600k starts for 2010, 650k starts for 2011 and 750k starts this year we are going to need 1.6 million new homes (including multi family) to meet that 15 million minimum. BTW the 60 year average for housing starts is 1.5 million so its right in line with historical demographic trends.
The interesting thing this that average rents exceed average mortgage payments in the same areas. The Echo Boom will be the prime demographic driver of the economy after you “Baby Boomers croak...” ;-)
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