Housing Starts

Housing starts have traditionally been a lagging indicator for the real estate market but it is a delicate balance at best. On one hand the population continues to grow even as older homes become obsolete. Data recently released by HUD indicates the number of housing starts at the end of 2008 were a mere 905,000...the lowest in recorded history. In fact, the last time housing starts approached this level was in 1975...since then we've added several hundred millions to the population. It should also be noted, the late 70's and early 80's were marked by rapidly rising interest rates and tremendous price jumps in the rental market. Short sale investors should take note and position themselves for potential gains. Remember, history may not always repeat itself but it often rhymes.Not Privately BuiltFor those that point to private builders as possible rationale for the low number of housing starts, it should be noted the number of new privately owned housing units completed has also fallen to one of the lowest rates in recorded history - barely topping 1,119,700 by the close of 2008. In contrast, 1982 recorded the absolute lowest number of private completions with only 1,005,000 yet again reflecting a higher percentage of the total population.Not ManufacturedForget manufactured homes - sales are so dismal the entire industry is facing possible ruin. In fact, sales and shipments are so lackluster they are but a fraction of former years with a mere 82,000 units shipped in 2008. Compare to 378,000 ten years ago, it's easy to see manufactured homes are not picking up the slack when it comes to affordable housing alternatives.Bottom Line: Although the number of delinquent properties and shadow inventory continue to rise, early indications seem to point toward a day of reckoning in the future. Once existing inventory is purchased, expect a significant lag time to meet growing demand. Currently distressed homeowners have reduced expenses, moved in with family members and made other temporary arrangements in the hope of "riding out the storm" but short term solutions will eventually give rise to the need for permanent housing. The statistics speak for themselves, inventory is no longer growing sufficiently enough to meet long term need. Position yourself for profitable opportunities both today and tomorrow by using short sales to build a long term portfolio from the proceeds of short term profits.