Providing Thoughtful Analysis on the Housing Market
Starts and completions use to track each other so closely. Then ~2008, this is no longer true. What happened?
Nothing to see here. Move along. ;)
Hi Louie, I have asked a few people in the development industry (FTR I am not in the development or RE industry) about the lag. It is most likely mostly due to more complicated builds. More recently labour and trades shortages, and delays in municipal inspections, will also contribute to the lag. The factors in the last sentence are inevitable when activity increases as it has in the past 2-3 years. I don't think there is a way around the constraint of relatively fixed labour pool except to have delays.
Louie: my theory is that there has just been more volatility in the starts numbers. I'm sure more complex construction plays into it too though. It looks to me that a spike in starts usually takes about 15 months to show up in the completions, and that's roughly true even if you look before 2008. The difference is that 2008 led to very rapid changes instead of sloping changes that allow completions time to "catch up".
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