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The Housing Great Depression

February 18, 2009 RSS Feed Print

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Some housing perspective from IHS Global Insight on the 12 percent drop in single-family starts and the 8 percent drop in single-family permits:

Conditions in the market for new homes have not been this bad since the 1930s, and they continue to worsen. In recent months, several factors that will extend the downturn in housing starts have come into play. First, the household formation rate has slowed, as homeowners losing their jobs or homes to foreclosure have moved in with family. Second, rising foreclosure rates have driven down the prices of existing homes, pricing new homes out of the market. Third, the credit crunch has made it difficult for builders with viable projects to obtain financing. Finally, the severity of the downturn and the stock market crash has reduced demand for long-lasting goods such as automobiles and new first and second homes. These factors will continue to play a role in depressing starts during 2009.

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I dunno about controlling the market forces and adressing the problem the logical way by "stop building houses". I think America is great because enterprise was never restricted there. Tweak things here and there but don't take sudden decisions. The present condition is a lack of sentiment. Grin and bear it out. The solution is cheap and affordable housing. Instead of trying to make money, I think banks should keep their investments honest. Things will change.

Rajax of CA 12:15PM March 12, 2009

Where market forces are at work there is progress. It is all supply demand and as the bubble formed supply got way out front as prices zoomed. That supply overhang is now being addressed the logical way: STOP BUILDING HOUSES. The demand side, as pointed out here is shrinking, for now, as unemployment rises and keeps young people from leaving the nest and grown ups decide to wait on that vacation / retirement home. This too will be self correcting as lower prics will make homes affordable again for those just starting out. All of this is good for the economy and restoring balance to the market.
Where is there a total lack of progress? In the government sector. "Affordable housing" fantasy made policy produced Fannie, Freddie and the CRA. There is mass denial from Barney and the gang. Nothing is being done to address this travesty and assure us that it won't be repeated. Obama and his crew are trying to rescue those that had no business buying a home. Tax payers are stuck with the mounting bills and banks are still being destroyed by government policy.

Pat D of IL 11:18AM February 18, 2009

The Housing Great Depression

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