Reuters: Housing starts hit 1-1/2 year high in November?

Because of this morning's Reuters headline, American home building rose to a 1-1/2 year high; most readers think that the housing market is on the rebound. Not so fast. The so-called "high" was totally due to the fact that multifamily homes were being built (i.e. condos and rental properties) at an increased rate of 32.2% in November. Single family home building only rose by 2.3% for the month. For the year, single family homes are still tracking at a negative 1.5% as compared to the prior year's activity.

The problem with building multifamily homes is that those kinds of homes will easily take sales away from the huge inventory of already foreclosed on and otherwise empty single-family units. As a result, don't expect single-family home prices to rebound for a very long time. Then, too, when the true home market starts to rebound again, there will be a massive glut of multifamily homes; leading to vacancies and, possibly, a number of run down neighborhoods and eye-sores.

The housing situation in this country has become a horrible mess. It should never have been allowed to get to this point in the first place. George Bush and, then, Barack Obama should have immediately addressed housing in each of their respective terms. We should have never allowed extremely easy, pre-recession mortgage lending to be turned into today's extremely tight credit and, now, almost non-existent mortgage lending. Instead, a middle ground policy on credit standards would have easily produced a moderate pace of home sales; eventually leading to a more robust sales as the economy recovered. Instead, we have one huge inventory of homes that will ultimately lead to another new and huge inventory of rental properties and condos in the future.