I just posted the Building Permits and Housing Starts for the State of Minnesota, and now I see they just released the Minneapolis/St Paul charts. This is what counts for us, not the national stats or State stats – although they are a good barometer.
As you can see we are “bouncing along the bottom” still. I wish we had data going back further to see how this compares to other recession periods. Housing Starts and Building Permits will continue to bounce along the bottom until the region starts creating more jobs, supporting additional population (immigration and natural birth). We need to keep a close eye on the employment figures, see chart following the permits and starts below:
These were released today (8/25/2011) from the US Department of Commerce: Census Bureau.
Mpls/St Paul 1 Unit Housing StartsMpls/St Paul Housing Units Authorized 8/25/2011
Minneapolis/St Paul Region Employment/Labor Force July 2011
As you can see with this chart, we have growing spread between employment and the labor force. (what the unemployment rate tracks). This shows us we have approx 122,728 unemployed in the labor force in the Twin Cities 7 County region. Assuming we could get to full employment, that is a lot of demand for housing. But let’s just calculate the difference between Jan 2005 and Jan 2011, that is approx 55,259 additional unemployed workers in the Twin Cities 7 County metro region. Not all of them will buy or rent housing, but a lot of them will. Keep in mind, we have approx 26,000 properties for sale in the Twin Cities metro region… If we use the old ratio of 1 housing unit to every 2 jobs (a number I pulled out of thin air..) we end up with demand for approx 27,629 housing units more than depleting our all of our supply. (double-check my math! I might have miscalculated on the back of a napkin here..) If that were to happen, builders would need to build approx 20,000 housing units to allow for immigration, new household formations, and move-up buyers. If employment turns around quickly, we could end up with a housing shortage. Not that we should be holding our breath right now, doesn’t look like anything promising that direction on the horizon yet..
Increasing employment is the only way this market will recover…