If anyone was still thinking the local housing market was bubble-proof, the StarTribune has done a pretty good job of dispelling that. According to the Strib, housing starts have fallen by nearly fifty percent since last year. This is also tied in to the slowdown in existing homes, since more homeowners can’t sell their current place to pay for the new McMansion they’ve always dreamed of building. Why this couldn’t have happened a year or two ago is beyond me, but apparently it was my fate to buy in at the top of the bubble…. sigh.
The Fed is doing a good job of keeping mortgage rates low, which is probably the only thing keeping house prices from sharply correcting. How much longer they can keep that up remains to be seen. In the meantime, I’m glad I don’t work in any profession connected to the housing market, since a lot of part-time or short-term realtors & loan officers will likely be looking for alternate employment, and in an economy that’s mostly cranking out low-paying service jobs, that’s not a pleasant prospect.
The development I live in has different ‘neighborhoods’, if you can call them that, where house prices differ dramatically, in some cases over $200,000. The more tony streets have empty lots that show no sign of moving, and the existing houses that are for sale show no sign of moving anytime soon. I’ll be interested to see how much both the builders and the existing homeowners panic in the coming months in an attempt to get out of from under property they don’t want to keep.