Horrid Housing Starts

Highlights:

Last three months: "the average seasonally adjusted annual rate for single family home starts was 689,000. The last time the figure was that low, Ronald Reagan was president and Paul Volcker was the Federal Reserve chairman. "

Another way to measure the decline: "has been is to compare the current seasonally adjusted rate with the actual number of housing starts over the preceding 12 months, again using three-month moving averages. A figure above 100 percent means starts are rising, while one below 100 percent means they are falling. The latest figure is 77 percent."

Long View: "It was the seventh consecutive month when the figure was under 80 percent. Other than a six-month string in 1981 and 1982, that figure has not fallen below 80 percent at any time since the figures became available in 1959. This is the 26 th consecutive month in which the figure was under 100 percent, meaning a declining market for starts. That matches the longest such streak ever, set in the mid-1970’s, when a severe recession was caused by soaring oil prices."

Comments:

Hold Tight: Currently, there is no indication that the bear market in real estate has run it's course.

Implications: Since the underlining assets are tied to National and International Fix Income Funds and Bank Holdings we can not anticipate any near term resolution of portfolio values until the knife (asset values) has stopped falling.
To all potential investors, be careful, it is very difficult to catch a falling knife.


Jim