The Housing “Recovery”

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New housing starts for March are out today. Rather than focus on the short-term movements, it’s worth looking at the long run. Here is the graph from calculatedriskblog.com:

It’s really quite an amazing graph. We are now five full years from the end of the recession (if you buy NBER dating). And housing starts are still below any level we’ve seen since the early 1990s! Very likely due to builders being more careful when they consider which loans to take on.

So who out there thinks we are ever going to get back to the 1.5 million annualized rate? When?

It may be time to start taking seriously the idea that the boost to the economy from new residential construction in the long-run may be much lower than it was in the 10 years prior to the Great Recession. The anomaly is not the weakness now, but the strength in the late 1990s and early 2000s.

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