Housing data is wonderfully useful information. The data are tracked and reported by several interests - private sector organizations and government agencies. The purposes for tracking housing starts are many, as the information provides an economic snapshot, useful in planning. Housing starts dually provide governments a pulse on new revenues sources and where the services government provides are properly directed. Housing start data for eight years has not been encouraging. The declines beginning in 2007 have remained stagnant - as clearly revealed on the chart below.
The left numbers are in thousands
chart courtesy of McGraw-Hill Publishing/Dodge Report
The duration of this decline is significant, and, unfortunately, impacting employment and economic growth. The continued decline eventually affects perspectives. A significantly diminished "New Normal" becomes the benchmark as activity in the sector stymies.
Several influences drive housing. Money for mortgages, more specifically; the availability of mortgage dollars at a competitive interest rate; coupled to faith in the general economy are necessary components for recovery. This decline is unique as mortgage interest rate are very competitive. Investment instruments - reflected in the Dow Jones Index are more active and more valuable than ever before – and the Dow contains banking heavy weights. Mortgage dollars – that issue from large financial institutions, ought to be prevalent. The pressures that provide the disincentive for mortgages/housing must also function within a New Normal for their sectors and the generic economy.
Those who once found employment in construction intimately know, and continue to suffer under the housing decline. Seven years is time enough for hopes to wan and alternative means for income sought. Good people, through no fault of their own, remain unemployed; and, in so doing, lose their competence in a trade as codes, materials, and practices change. This is the human consequence of the decline. Eventually, those formerly employed in construction give up on finding employment again. Once the do, they are dropped from the unemployment roles – which helps explain why that reported number drops.
It’s important to realize as the Reported number of the unemployment continues to drop, unemployed people who cannot find a job in their trade, and abandon trying to find employment are removed from those counted – thus reflecting an inaccurately positive reported unemployment number.
Locally, 2014 has shown positive indicators - despite the rest of the nation reporting a flat growth curve.
Confidence in an economy is so very important. Working to assure lenders are positioned to need mortgage interest incomes was once a high priority. That is the ONLY scenario where housing returns to past norms and those once employed return to their professions. Creating an environment that endorses banks/lenders to turn away from mortgage income to another investment instrument, assures housing will never recover.
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