Hale Stewart

About the Author Hale Stewart

Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM from the Thomas Jefferson School of Law in domestic and international taxation where he graduated Magna Cum Laude and is also a Chartered Asset Manager, Chartered Wealth Manager and Chartered Trust and Estate Planner from the American Academy of Financial Management. He is the author of the book US Captive Insurance Law. You can read him daily at the Bonddad blog (www.bonddad.blogspot.com).

The Longer-Term Trend of Rising Housing Investment is Still Intact.

Right now, housing and cars are carrying the US economy, in the face of a shallow industrial recession partly in the Oil patch, and partly about the strong US$. Yesterday’s housing report didn’t exactly make the situation clearer.

Here is the longer-term look at housing permits (blue) and starts (red) dating back to the beginning of 2008. Remember that starts tend to lag permits by a month or so, and starts are about twice as volatile as permits:

Sure enough, the spike in permits from May and June has fed through to higher starts.

Now let’s decompose permits into single family vs. multi-unit permits:

The tax credit program of 2009 stands out, as does the recent May-June spike in multi-unit permits brought about the expiration of a program in New York City. We can also see that multi-unit permits are much more volatile.

Now here is the close-up of the last 12 months:

The first thing to note is that single family permits have continued to increase, with September down by just 2,000 from August’s 6+ year high.

Secondly, the rush to beat the expiration of the NYC program has really played havoc with the multi-unit stats, including YoY stats. But almost certainly a significant percentage of the surge in May and June were permits that would have otherwise been issued in July and August.

If we add just 20% of the May-June surge to July and August, then multi-unit permits (ex-surge) still made new post-recession highs. (Recall that we hadn’t had 400,000+ multi-unit starts since the late 1980s).

The bottom line is that, while September was a decline from August, the longer-term trend of rising housing investment is almost certainly intact.


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