The ‘Catastrophic Change’ In Real Estate…A look at empirical evidence of a real estate depression
by Barry Ferguson
Tue, 21 Sep 2010
We learned today (9/22/10) from our illustrious US government that new housing starts jumped 10.5% in August. Don’t get exited. Almost all of the gain was from apartment construction. This month-over-month burst in activity is still 9% below last year’s level. Nevertheless, the recession has been declared dead, the stock market has appreciated every day since the conclusion of Bernanke’s August Jackson Hole, Wyoming meeting, and the government needs affirmation of both events. But like most people with a functioning brain cell, I have eyes and ears. Here are my observations on real estate from my little vantage point.
Two weeks ago, the largest private luxury home builder in our area (population of over one million in metro area) called it quits. The company specialized in houses costing a half million dollars on up. They said they would finish what they had started but expected to be out of business by the beginning of next year (2011). They have been in business for over 30 years. In 2006, the company won the ‘Builder of the Year’ award from Professional Builder magazine. In their statement, the company’s president said that real estate had experienced a “catastrophic change”. They went on to say “…that the real estate market has been and continues to be worse than any of us thought even remotely possible”. Cheer up, fellows! The recession is over and ‘recovery’ is here!