Builder Blues

I wanted to share a chart from one of my favorite economics blogs.  One of the issues facing the national housing market is a turn away from new construction and a recycling of existing home inventory.  Unemployment rates have diminished demand for housing and tighter bank lending has created an adverse environment for borrowing to build. 

Queue today's chart please:

If you have been wondering how bad things are for builders, well now you know.  It's as bad as it has been since before 1968.  The red line is single family houses and the blue line represents single family homes, condos, multi-units and other residential structures.  As you can see, we have fallen off a cliff and are now scraping at the bottom of the ravine.  Most economists predict our current level of activity for several years into the future.  

So what does this mean?  The bottom line is that the money in the market is in existing housing supply, not new construction.  Don't build a spec home right now.  You will loose your shirt.  Rehabbing existing homes is where money is to be made.