http://www.cnbc.com/id/25716754

Due to New York City enacting a new set of construction codes effective July 1. Developers rushed to get the permits before then.

This 'goosed' the Nation's Housing Starts figure to increase by 9.1%. Without NYC, starts nationwide would have fallen 4%.

Of course, many may interpret this as a positive sign.

And as you won't be surprised, I interpret this as a nail in the coffin.

My reasons are:

1. We just got confirmation that demand dropped by the most in a decade with the huge drop in sales transactions in YoY Q2 figures.

2. This jump in permits implies a large influx of supply

Combine the both of them together, and you get a fall in demand, at the same time there is an increase in supply.

This will put significant downward pressure on prices.

In another thread, we discussed in great detail the simple laws of supply, demand, price, elasticity, liquidity and time-frames.

In that discussion, we assumed a perfectly inelastic supply for housing in NYC. Here, we have evidence that the supply may not be that inelastic and may actually be increasing.

The more supply the merrier, to me. There's already too much - let there be more!

More detail:

"It was unclear whether the figure was caused by quirks in the government’s statistical methods. The Census Bureau, which conducts the survey, warned in its report on Thursday that it “does not have sufficient statistical evidence to conclude that the actual change” in housing starts “is different from zero.” The bureau said it was 90 percent certain that the actual change was between 19.4 percent and a negative 1.2 percent."

http://www.nytimes.com/2008/07/18/business/18econ.html?ref=business

90% certain that the change was between +19.4% and -1.2%. Which is akin to saying, "I'm 90% certain that we're either going to get 19.4 inches of snow, or a long-drawn out drought."

Encouraging.

for someone who has been looking to find something affordable in the 3br/2ba category in the UWS/Harlem, Steve's notion that there is excess supply in Manhattan that should motivate a price collapse emerges as a a delirious fantasy. I wish it would come true

Not really news to me. I've had many projects come across my desk within the past 6 months that were trying to get going before the 421-a change. Might be interesting when the inventory starts coming online in the next 12 months or so.

Just what a falling market needs.... a fresh supply of inventory!

10% chance it was greater than 19.4% OR less than -1.2%. So you're telling me there's a chance.

http://www.youtube.com/watch?v=KX5jNnDMfxA

When sales are down 30 something percent in Manhattan and 40 something percent in brooklyn, how can increases in permits be anything other than an "oh shit".