Owee!

Year-on-year foreclosures were up 65% in April. Even here in supposedly robust Utah the figure is 63.1%, and that doesn't include short sales, work outs, deeds in lieu, receiverships, and other "informal" procedures that are becoming more common. And the houses keep flooding the market.

But wait, there's "hope." The housing market inventory will contract some day because construction is grinding to a halt. Utah Business reports that Q1 2008 residential building permits showed a year-on-year decline of 58.2%, which manages to beat the Q4 2007 decline of 53.4%. Before these two, the worst quarter Utah ever had was the 50.1% drop in Q3 1987. There are some of us who still remember 1987. It was a bloodbath. You couldn't give away small rentals, condos, and townhomes, and whole subdivisions of new construction were foreclosed on and dumped on the market, effectively strangling the resale market. There was a billboard on I-15 that read, "Will the last person leaving Salt Lake please turn out the lights."

If that's the neighborhood we're moving into....

Building Permits at 20-year Low

Or close to it. Building permits in March dropped to the lowest level since at least 1990. Builders have such a backlog, they're having to stop building to clear it out. Which really means they can't get new construction financing until they clear some of their old construction financing off the deck. Which really really means that their cash flow, the life blood of any business and especially construction, has come to a standstill. I think the Chapter 11s are just getting started.