Record Low housing construction starts. What does this mean to Real Estate?

Real Estate Guy is reporting the national annual home permits issued as follows. (permits is as close as we can get to home starts, the number of new homes being built.)

single family homes, numbers in thousands

1960 National 745 Midwest 171

1970 647 148

1980 710 108

1990 793 165

2000 1198 245

And the more recent years.

2004 1613 295

2005 1682 278

2006 1378 209

2007 979 153

2008 575 93

2009 441 75

2010 447 75

Wow!!! See the drop. The peak year was 2005. 2009 and 2010 starts were just 25% of the top years. Certainly the lowest in this time frame.

We can see that builders are having a terrible time. So what does this mean to the Housing market?

In a market which is flooded by an abundance of housing for sale, and foreclosures and short sales coming out of the woodwork. Taking away the competition and adding of the extra supply from new construction reduces the pool of homes for sale. It helps keep the market balanced. It will lead to a speedier recovery. A speedier recovery means good news for prices and sellers and the economy too.

However, beware. It will also leave us short of housing stock down the road, and this can lead to accelerated housing inflation.

http://wi-realestateguy.blogspot.com/2012/01/low-homes-starts-mean-faster-housing.html