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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Housing: Partying like it's 1925

By Morgan Housel






JewishWorldReview.com | As incredible and out of balance as the housing bubble was, I'm becoming more convinced that the housing bust -- particularly in new-home construction -- has been even more remarkable.

From 1960 to 2007, America built an average of about 1.5 million homes per year. That ballooned to 2.2 million per year during the housing bubble, and collapsed to half a million a year in 2010. After rebounding from the depths, about 800,000 new homes were built in 2012.

There's something incredible about that 800,000 figure. I recently came across a chart in a paper by UCLA economist Ed Leamer, showing housing starts from 1920 to 1950. It shows that housing starts in the year 1925 were about ... 800,000.

Think about that. We're building the same number of homes today as we were back when cars had to be started with hand cranks and when the new technological breakthrough was a giant box called a "radio." The U.S. population in 1925 was 115 million and growing by about 1.5 million per year. Today, it's 315 million and growing by 2.5 million per year.



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Comparing current housing starts to 1925 levels isn't meaningful in itself. It's just a way to put the current market in perspective. But that perspective should be powerful: Given household formation and current levels of existing inventory, there is no reasonable way to justify today's levels of housing construction. Barring a deep demographic shock like a war, it won't support population growth.

The Financial Times spoke with Bill Miller of Legg Mason last month and reported: "He (Miller) says there is a big structural demand for homes due to a growing population and a lack of building during the bust, when fewer than 500,000 new homes a year were built. The long-term trend is for 1.4 million to 1.5 million new homes a year, so to catch up, 'We probably need to get to 2 million housing starts at some point in the next five years.'"

We don't know exactly when that's going to happen. It could be next year or five years from now -- maybe even longer. But we know with a high degree of confidence that it will happen someday. People need roofs over their heads.

And we know what will come with a boom in construction: It's good for jobs, it's good for economic growth, and it's obviously good for homebuilders. A quality builder like NVR has a good chance of outperforming in the coming years.

Some worry that homebuilder stocks look expensive. That's understandable. But valuing a homebuilder based on current earnings might be misleading. If housing starts double from current levels, as Miller and others suggest, earnings growth at homebuilders will surge. A decade ago, people made the opposite mistake, assuming homebuilders were cheap based on inflated earnings. Remember: Busts can be just as distorting as booms.

(Morgan Housel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.)

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Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.


Previously:


A rebuttal to student loan horror stories

CONGRATULATIONS: We just saved half a trillion dollars

End this crazy tax: It will boost the economy

Medicare: A dangerously good deal

Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



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