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Posts Tagged ‘Hurricane Katrina’

Riding The Storm Out: Housing Boom May Continue For A While

September 5, 2005 | 11:19 am | |

There was a great article in the New York Times today that provided some logic as to why Katrina could extend the housing boom further.

There have been signs lately that the intensity of the housing boom was waning as outlined in a WSJ story [Note: Paid Sub.] or could it simply be because its August? 😉

The shortage of building supplies and rising fuel prices as a result of the storm are thought to temper the economy, dragging down long term rates as inflation threats are diluted. The outlying areas around the devastated region are already seeing a surge is rental demand as people were displaced from their homes.

We can already see a damper in mortgage rates, which dropped sharply last week.

In another good article in last week’s New York Daily News [no, not because I was in it] that provided similar logic. Higher costs are keeping a damper on inflation, which keeps long-term mortgage rates low.

What I find so fascinating about all this is how different the economy is today as compared to the last oil crises in the early 70’s. Bond investors see a slowing economy as the answer to keeping inflation in check. Corporations are forced to absorb much of the higher operating costs that come along with rising fuel and material costs due to foreign competition. That in turn keeps a reign on hiring and payroll.

There is already speculation that the Fed will not raise short-term rates in their next session due to concern that the economy could slip back into a recession.

And the housing market keeps going…

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Katrina Aftermath Is Expected To Cause Higher Building Costs

September 4, 2005 | 10:37 pm |

The National Association of Home Builders just released a study on the impact of Katrina in the housing market. More than 200,000 homes in New Orleans alone were wiped out.

The building industry is already experiencing the effects of Katrina due to the loss of a number of lumber mills in the south Building material costs were already rising due to the strong housing markets across the country. Real demand for materials hasn’t peaked yet since clean up has not yet occurred. Building supplies aren’t expected to see the same magnitude of price increases because the supplies are not shipped through the Gulf.

The prices of local building supplies in the Alabama are already increasing. Building labor is expected to rise as well.

“Ken Tennefoss, publisher of Crow Publications, which produces a number of lumber-product-related reports, said the industry is better prepared to provide materials than it has been in the past because of the bigger customer base created by stores such as Home Depot and Lowe’s.”


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Katrina Causes Surge In Demand For Rental Housing In Outlying Areas

September 4, 2005 | 9:54 pm |
Source: NCAR

On August 29th Hurricane Katrina brought devastation to the housing markets of New Orleans, Biloxi and the surrounding areas. Now the outlying areas are anticipating a housing boom. Mobile, Alabama is seeing a scarcity of rentals.

Housing developers are looking at what type of housing they can build quickly to meet demand.

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Lumbering Giant Wants [2] Help [x 4]

September 1, 2005 | 10:47 pm | |

There has been a heated debate between the US and Canada over the tariffs being assigned to softwood imports into the US. In 2002, the US implemented these tariffs, which are reportedly contrary to the NAFTA agreement. [Note: Sub.] A 3-person arbitration board ruled that the US must refund over $5B in tariffs collected from imported Canadian softwood. The US lost the appeal on the ruling but still has refused to refund tariffs already levied.


There has been a lot of controversy surrounding the softwood tariff debate. Canada exports more than 50% of the lumber they produce to the US and the US will need more lumber as a result of Hurricane Katrina and the on-going housing boom. Look for rising prices for construction supplies as a result.
[Casper Star Tribune]
[National Post]
[CBC]


The housing boom has placed a significant pressure on the availability of lumber for construction. Wood exports from Canada are a significant source of lumber for the US and a major export of Canada.

In light of Hurricane Katrina’s extensive damages to the gulf area housing stock of Lousiana, Mississippi and Alabama, demand for construction supplies are expected to increase significantly and at least one advocate for affordable housing wants the tariffs removed.

Lets hope these two allies and neighbors can resolve their differences and get this crises resolved soon.

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Disaster Relief Aid After Hurricane Katrina

September 1, 2005 | 5:19 pm |

This has turned out to be a larger disaster than anyone imagined. Here are some ideas on how you can help in the relief effort.

Relief Organizations

[American Red Cross through Apple iTunes]

I used Apple iTunes (100% goes to the Red Cross) but all are great organizations.



[American Red Cross]



[Salvation Army]



[North American Mission Board Disaster Relief Fund]



[FEMA]


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Katrina & Oil Prices: The Perfect Storm

August 29, 2005 | 7:23 pm |

katrina

Late last week, as the hurricane threat to the Gulf of Mexico increased, the oil futures market became concerned that production would be affected. Futures traders bid up the price of oil and gasoline due to the perceived future constraints on supply and now oil seems headed for $70 per barrel. The futures market seems hyper-sensitive to any threat to oil production these days.

refinery2



How can this impact housing prices?

Simple. Higher Mortgage Rates.

As this and other inflationary factors gain momentum (if they do), bond investors would likely become concerned about the inflation risk in the long term, which eventually translates into higher borrowing costs. Higher borrowing costs generally translate into lower home prices.

Then again, thats just one theory of many. Lets ride the storm out.


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