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Posted by: Peter Coy on January 19, 2006

No question—housing construction is slowing. The Census Bureau said today that starts on privately owned housing in December ran at a seasonally adjusted annual rate of 1.93 million units. That’s down almost 6% from a year earlier. It’s also the first time since last March that the annual rate has been below 2 million.

This is …

*Bad for construction workers
*Bad for homebuilding companies because it means their sales will fall
*Good for homebuilding companies because the drop in construction lessens chances of a glut
*Bad for real estate agents, because there’s less new inventory to sell
*Good for home sellers because it means there’s less fresh supply to compete with
*Bad for homebuyers who were hoping for the same glut that homebuilders fear

Did I leave anything out? Oh, yeah:

*Good for crows. The corn fields they feed on won’t be bulldozed under for subdivisions quite so quickly.

Reader Comments


January 19, 2006 8:55 PM

You left out, great for buyers as builders stop building when it becomes unprofitable - meaning, they see the future decline in prices and so they postpone projects until they provide a better rate of return.

Jeff Morrow

January 20, 2006 4:29 AM

Good for the deers, and wild cats, and nature in general. Sometimes I think that if you took everyone in the country, you could relocate them all in California and still have land left over. That way we don't pave over so many natural resources.

Personally, I think we're in for a soft landing. But doesn't gut feeling say that when you have a fed rate at 1% that feeds a housing price rise that there has to be another shoe to drop.

How long did it take for everyone to think there was a bubble in the stock market in the late 90's. It took years for it to finally hit. Everyone knew it was coming, but no one knew when.

Same with the housing maraket. Who can afford a $500,000 1,000 square foot 1960 inner city shack?


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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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