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posted by martyb on Wednesday August 15 2018, @06:42AM   Printer-friendly
from the building-up-to-it dept.

Home Depot's Sales Rebound Muted by Inflation in Fuel and Lumber

Home Depot Inc.'s sales rebounded last quarter as Americans took on more remodeling projects, but rising costs for lumber and transportation are weighing on profitability.

[...] Home Depot and its smaller rival Lowe's Cos. are often seen as proxies for the health of the housing sector because property owners spend more on their homes when they believe values are rising. But for several quarters there's been increasing concern that years of robust home-price gains are cooling. For its part, Home Depot has continually said that a shortage of available homes in many markets would actually underpin higher home-improvement spending.

[...] Even as the overall housing market looks to be cooling, several trends are driving demand for home-improvement products. A shortage of available listings has slowed property purchases, causing some owners to opt for sprucing up their homes instead. Additionally, more people are staying longer in their homes, which also supports the uptick.

The labor market also plays a role: A strong run of hiring, coupled with moderate wage growth, has boosted Americans' wherewithal to spend money on fixing up their homes. Spending on home improvement -- which accounts for about 38 percent of private residential construction outlays -- surged 13.8 percent in June from a year earlier to reach $221 billion, according to Commerce Department data. Going forward, the job market may continue to propel housing and remodeling demand. But potential hurdles include a pickup in mortgage rates, a shortage of skilled workers for building and remodeling projects, and rising costs for construction materials such as lumber, which is affected by tariffs.

Also at CNN and CNBC.


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  • (Score: 2) by MichaelDavidCrawford on Wednesday August 15 2018, @03:20PM (11 children)

    by MichaelDavidCrawford (2339) Subscriber Badge <mdcrawford@gmail.com> on Wednesday August 15 2018, @03:20PM (#721816) Homepage Journal

    Some told me that there are more empty houses than there are homeless people. Can I find a [needed citation]? Here's one [mintpressnews.com]:

    “Since 2007, banks have foreclosed around eight million homes. It is estimated that another eight to ten million homes will be foreclosed before the financial crisis is over. This approach to resolving one part of the financial crisis means many, many families are living without adequate and secure housing. In addition, approximately 3.5 million people in the U.S. are homeless, many of them veterans. It is worth noting that, at the same time, there are 18.5 million vacant homes in the country.”

    There are lots more pages that discuss the large ratio of empty houses to homeless people.

    One source of this problem is that many of those empty houses are owned by banks as a result of foreclosure. Those banks are just sitting on them until they can be sold for at least as much as is required for the banks to break even on the bad mortgages.

    What I fail to understand is why the banks don't rent them out. Among the causes of homelessness is that there just aren't enough rentals. In Vancouver, Washington where I live, the rental vacancy rate is less than one percent. It's worse in Portland Oregon.

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  • (Score: 4, Informative) by AthanasiusKircher on Wednesday August 15 2018, @03:47PM (1 child)

    by AthanasiusKircher (5291) on Wednesday August 15 2018, @03:47PM (#721826) Journal

    What I fail to understand is why the banks don't rent them out.

    Have you ever been a landlord? If you had, you'd probably understand why.

    You may be the sort of person who is a responsible tenant. Most people are not. They don't pay rent on time. They don't take care of the rental property or inform the landlord if potentially major issues with the property come up, leading to major repairs down the road. (Conversely, some complain constantly about minor things.) Many cause significant damage to the rental property.

    Many homeless people have other problems other than just homelessness. They have major financial issues that would preclude them from even paying a minimal rent. They may have personal or mental problems that would raise the chances of problems for a property owner (increased risk of damage, etc.). A simple cost-benefit analysis for most banks would probably indicate that they're better off financially by having the home vacant for a little while until they can auction, rather than take a chance with a tenant who could make the property worth significantly less.

    And, banks generally don't want to be in the property ownership business -- they ultimately want to sell the property and get rid of it. Selling a rental property with a tenant is often much more complicated. And if these are houses, many potential buyers may actually want to live there, so the only time a sale can happen is if the tenant is moving out. And many bad tenants refuse to leave, so you need to deal with evictions (and those who are evicted are even more likely to trash a place before they leave).

    Being a landlord is a massive headache if you roll the dice and get bad tenants, which is why many folks who own only a few properties tend to let a larger property management company deal with it for them (even if they take a large cut).

    I doubt your linked statistic is correct for today, since vacancy rates have gone down significantly in the past decade. But I also don't doubt there at least enough vacant home to house all homeless people, if it were possible to divert resources in that way. Unfortunately, logistically, it often isn't feasible.

    • (Score: 1) by khallow on Thursday August 16 2018, @02:22AM

      by khallow (3766) Subscriber Badge on Thursday August 16 2018, @02:22AM (#722017) Journal
      I bet the bank can figure out the landlord problems rather easily. My take is that the real reason is that by taking these homes off the market even for rent, it props up the price of the remaining real estate. There might be a sort of quid pro quo where the banks leave this property indefinitely off the market while pretending the real estate is still at its old value and various relevant US government agencies look the other way while this problem remains masked from the public.
  • (Score: 3, Interesting) by schad on Wednesday August 15 2018, @04:00PM

    by schad (2398) on Wednesday August 15 2018, @04:00PM (#721832)

    What I fail to understand is why the banks don't rent them out. Among the causes of homelessness is that there just aren't enough rentals.

    Banks don't want to be landlords. Any house that has sat empty for a year will need repairs, regardless of the state it was in originally. Banks don't want to have to deal with that. They don't want to have to deal with renters, and rental agreements, and inspections. To them, it's a business they just don't want to be in.

    Of course, banks would happily sell to someone who does want to be a landlord. But landlords want to be as close to 100% capacity as possible, all the time. That way, they don't have to pay to maintain a vacant property, which of course generates zero revenue for them. It also lets them increase rents, making them more money.

    They can get away with this because a large chunk of the rental market is... non-free, in one way or another. A lot of units are rented by giant companies with resources that a small landlord couldn't hope to match. Sure, right now they are just sitting on their piles of cash, but they can and will spend it to bankrupt anyone who tries to compete with them. Another problem is HOAs. Where I live, it's almost impossible to find a house that's not in an HOA, and HOAs hate renters. Third, city governments can actually get involved, for basically the same reasons that HOAs do.

    These all make it very costly and high-risk to buy up vacant properties and then rent them, especially if you're not a huge company with massive resources. People still do it, but I agree, it doesn't happen at nearly the rate it ought to. The main question is what to do about it. If you try to force the bank to do something, you're likely to make banks less willing to offer mortgages, especially to more-risky borrowers. If you try to force HOAs and cities not to get in the way, you'll face a popular revolt; these stupid restrictions exist because people want them to exist. I don't really know the answer.

  • (Score: 3, Interesting) by bob_super on Wednesday August 15 2018, @05:30PM (2 children)

    by bob_super (1357) on Wednesday August 15 2018, @05:30PM (#721857)

    Define "empty".

    There are millions of homes used less than a month per year. Some of them are really big and expensive, too.

    • (Score: 1, Interesting) by Anonymous Coward on Wednesday August 15 2018, @09:06PM (1 child)

      by Anonymous Coward on Wednesday August 15 2018, @09:06PM (#721920)

      Following this line of reasoning, there is near "infinite" space available at night in all those big office buildings--they just sit empty until 8am the next morning. Why don't people live there (when they aren't working)?
      (I first saw this in Bucky Fuller's writing)

      • (Score: 2) by bob_super on Wednesday August 15 2018, @09:37PM

        by bob_super (1357) on Wednesday August 15 2018, @09:37PM (#721929)

        I'm all for it. It would only affect us if you found a homeless guy willing to move in between 1AM, when the last two guys left last night and 6:30AM, when one came back this morning.
        I need a new job.

  • (Score: 2) by suburbanitemediocrity on Wednesday August 15 2018, @07:38PM (1 child)

    by suburbanitemediocrity (6844) on Wednesday August 15 2018, @07:38PM (#721898)

    A friend of the family's adopted kid has fetal alcohol syndrome (FAS). The majority of homeless people have FAS (https://www.fasworld.com/fasd-facts/). This family has spent hundreds of thousands of dollars on them. Various government programs have spent at least half a million dollars. Nothing is going to work. They utterly trashed a house, a nice house in a nice area.

    I bought a house that was trashed by renters and paid 1/3rd of what it would otherwise have been worth.

  • (Score: 2) by takyon on Wednesday August 15 2018, @07:40PM (1 child)

    by takyon (881) <reversethis-{gro ... s} {ta} {noykat}> on Wednesday August 15 2018, @07:40PM (#721899) Journal

    https://www.vice.com/en_us/article/bnjb78/how-to-claim-squatters-rights-to-stop-paying-your-rent [vice.com]

    http://www.independent.org/news/article.asp?id=8737 [independent.org]

    Being a landlord is a huge pain in the ass in many U.S. states, but at least a landlord might have the option to physically live in the property they own and prevent squatters from coming in and taking over the place. Bank-owned empty properties are practically begging for the homeless to get in and trash the place. Presumably, preventing them from ever getting in (by locking it up nice and tight and not leaving keys around for them to make copies of) is the correct solution for banks. Then they can use realtors to sell the property safely while screening out potential squatters.

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    • (Score: 2) by MichaelDavidCrawford on Wednesday August 15 2018, @09:02PM

      by MichaelDavidCrawford (2339) Subscriber Badge <mdcrawford@gmail.com> on Wednesday August 15 2018, @09:02PM (#721919) Homepage Journal

      At least there were at the time I read about it.

      _Some_ of those squatters could have been responsible tenants.

      I've done a good job of taking care of my taxpayer-subsidized apartment, as well as paying my portion of its rent. I expect that the next time my rent is recalculated I'll start paying all of the rent myself.

      It's not true that the homeless are too lazy to work, or that they lack the job skills. I founded the consultancy I own now while I was still homeless and was making bids in response to inquiries from potential client. My plan for when I actually closed a contract was to do all their work at Starbucks and Peets.

      Quite a common reason for homeless is that a couple splits up with neither of the two earning enough money to rent a place on their own - but while they _were_ together they were paying the rent with money they earned at both their jobs.

      A disabled welder I met at breakfast at Portland's Blanchet House Of Hospitality said to me "You talk to some guys on the street, they'll tell you that they used to make six figures."

      I didn't tell him that _I_ used to make six figures.

      Before he became disabled, that welder helped to build the world's largest steerable dish radio telescope, in Green Bank West Virginia.

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  • (Score: 2) by Reziac on Thursday August 16 2018, @02:26AM

    by Reziac (2489) on Thursday August 16 2018, @02:26AM (#722019) Homepage

    Well, there's always Detroit...plenty of vacancies!

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