Most Important Housing Data On The Internet: Housing Starts Vs. Household Formations

3 min read6 days ago

is the angriest man on the internet. But the good news is that he does not discriminate with his anger, as he viciously attacks both the right and the left if they dare to disagree with any of his dire predictions.

Recently, he has informed us that ; ; and .

He also reminded men that if and that they have every right to act like kings (that’s not going over well in our woman-dominated firm right now 😊).

However, his most frequent posts are about a potential housing crash, with a strong focus on inventory and demographics. …

Enter MBS Highway.

Like , MBS Highway does a beautiful job of refuting the doom and gloom of the “crash bros.”

Housing Starts vs. Household Formations

And today, they focused on Housing Starts vs. Household Formations (which require a home to live in).

Housing Permits — which includes BOTH single-family and multi-family housing — are at an annual rate of 1.41 million (about where they have been for some time). However, many permitted homes will not ultimately be completed. So, “housing starts” (where ground is actually broken) is the more important number. And housing starts are way down to 1.36 million annually. This is important because household formations (kids moving out on their own, immigrants moving into the country, divorce situations, etc.) have been averaging about 1.8 million.

So, there is going to be a housing shortage.

It Was the Opposite Prior to 2008: Household Formations at Record Lows!

What makes Mr. Darth’s comments even more confusing is that household formations PLUMMETED prior to the 2008 housing meltdown — when they were consistently under 1 million (see chart below). And at the same time, housing starts were as high as 2.3 million! So, conditions were exactly the opposite prior to 2008.

Poor Mr. Darth is going to be very sad when a housing crash does not kill us all…

My final point is that this is great data to share with potential buyers who are being unduly influenced by the “crash bros.”

(Charts to back up my points are below.)