2011 Housing Report: The Worst Year in Modern History

by John Galt
January 29, 2012 22:00 ET

There will be great discussion about the “recovery” of 2011, but the reality of just how dire the economy is for Main Street is best defined by the one asset the average soul attempts to hold up as their primary investment, the single family house. Unfortunately for the political elites, the disaster which was housing in 2007 is not much better in 2011 and in fact appears to be taking a sharp, decisive turn to the downside for a final impact crater which will leave the markets floundering for the next decade if not longer.

As incomes and net wages continue to stagnate or decline depending on the geographical location of the family attempting to keep their home’s value from sliding into the abyss, a recovery is a distant prospect for much of the nation. The problem that the “experts” on television and within the industry refuse to acknowledge that during the last great deleveraging episode in U.S. history, the real estate market would have required over twenty years to recover if it were not for a world war. Barring the declaration of such a war, Americans could experience another in a long series of historic asset destruction which starts with the real estate industry and spreads throughout the economic infrastructure courtesy of the world’s central banks, especially the Federal Reserve, creating financial bubbles which ultimately implode.

The following charts are for all data released through this past week which completes the reports on housing through 2011, except for the Case-Shiller Index which will be released in the next few weeks.

I. Permits

As a forward looking indicator, this is only one part of the puzzle. Despite some improvements, the number flounders near historic lows.

(click on thumbnails to enlarge graphs)
housing_permits_nsajgfladec_11
The single family permit picture is much more dire and consistent with a depression rather than a correction as some would have the public believe:
housing_singfam_permits_nsajgfladec_11

II. Starts

The picture regarding housing starts has only slightly improved thanks to demand for rentals in the multifamily portion of the equation improving.

housing_starts_nsajgfladec_11

The annual starts number reflects a historic all time low for single family starts which reflects the depressed state of the U.S. economy on Main Street, even if Wall Street is still living off of Bernanke’s fiat vapor money.

housing_starts_nsajgfl_annual2011

III. Under Construction and Housing Completions

Housing completions remain at historically depressed lows but the real news is in the single family housing units under construction which are at a historic low since records have been kept since 1969:

housing_completions_nsajgfladec_11
While the monthly numbers are depressed, the annual housing completions are at the lowest level in U.S. history since record keeping began:

housing_completions_nsajgfla_annual_2011housing_underconst_nsajgfladec_11
IV. Pending and Total Housing Sales

With the Pending Sales report from the National Association of Realtors reflecting the seasonal dive in December of 2011, it will be interesting to see if further revisions occur to their data in the future. That question is valid considering the actual total non-seasonally adjusted home sales for all units regardless of size registered a historic all time low since record keeping began in 1963. Perhaps someday the drastic seasonal adjustments will reflect reality instead of politics for the purpose of providing accurate economic data points.

housing_pending_sales_nsajgfladec_11

housing_sales_nsajgfla_annual_2011

With the annual number recording an all time low above, the monthly data along with the breakdown by sales price is as dire as one would expect:

housing_sales_nsajgfla_monthly_dec2011

housing_sales_nsajgfla_300k_dec2011

housing_sales_nsajgfla_299kless_dec2011

If anyone has ever wondered what an economic depression looks like, the charts above reflect the impact of such on the average citizen. Without a turnaround in housing the rest of the economy is totally decoupled and detached from the reality and pain being felt in many states and communities around the United States and now, around the world.

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