pochovilla

Housing Excess Looks Good, but Not That Good

When the trend reverses it overshoots and looks like a 200,000 - 250,000 inventory of unsold new homes may signal a reversal. I would expect that builders will be challenged for several years to build more affordable housing due to high energy prices, cost of credit and down payment issues. This will continue to pressure earnings.
The consumer needs to have control of debt to income, not just principal, interest, taxes and insurance. Car loans, credit cards and utility costs are "virtual (real) debt" that needs to be a factor in the housing affordability calculation. Maybe the range of 2.5-3 X income with 20% down should be the new calculus for buyers as few jobs are providing annual income increases over inflation.