Bill McBride – who strike a more Smithian tone by the day – delivers one chart that shows the core observation I made over a year ago now.


Probably my most concise early statement comes from a guest blog I did for Megan McArdle at the Atlantic.

I’ve argued that whatever its flaws might have been, the subprime boom should be viewed as a technological innovation that allowed millions of households to switch out of the market for mutli-family homes and mobile homes and into the single family market. This drove both a switch in the type of construction and pushed up the price of existing single family homes.

Yet, even more important for understanding the current state of the economy is appreciating that while the increase in home building during the boom was not historic, the collapse in homebuilding has been. For several years now the United States has been building fewer homes than any single month in the 40 years proceeding.

And of course I cannot post this without calling attention to Cardiff Garcia, who distinguishes himself as a true scholar and a gentleman by digging up this old blog post which I would have otherwise have forgotten.


And remember time-to-build. Not many homes will be completed in 2012 either because not many were started in 2011. Perhaps not as deep of a record low as 2011 was but still completion this year will be dramatically low by historical standards, running, well over a million homes below the long run average.