The Most Important Housing Chart Shows Things Are Still Getting Worse

[AllentownJake]

Bulls are beside themselves about the recent housing recovery in house prices: It's off to the races again!

This is a happy theory, but the trouble with it that the fundamental problem in the housing market is still getting worse, not better. To wit: In the bubble years, we just built too damn many houses.

This overbuilding has led to record vacancy rates, both in rentals and in rentals plus owner-occupied (not) housing. This situation is not getting better. On the contrary, it is getting worse.

This chart from Calculated Risk tells the story. The red line is vacancies. The blue line is housing starts. Calculated Risk wisely observes that housing starts will not return to normal until we need more houses. And we won't need more houses until vacancy rates start to drop.



http://www.businessinsider.com/henry-blodget-the-most-important-housing-chart-2009-11