58robbo

Three Factors that Will Drive New Home Sales

some people believe this idea that population growth necessarily drives demand for housing is a fallacy. is it not possible that many of these mcmansions will start housing an extra generation or two? what i mean is that is it totally inconcievable that 25yr olds might move back home and retirees might move in with their kids etc?

On Nov 04 01:31 PM Stephen Rosenman wrote:

> clreed1252 and 58robbo:
>
> The point of the piece is that new home sales are depressed far below
> anything that has been seen in most of our lifetimes. If you go back
> through new home sales records that have been kept (about 46 years),
> it is hard to find anything similar. If you take into account the
> growth of the U.S. population, the numbers are even more startling.
> Were new home sales to rise to levels seen at any time in the 1960s
> or 70s, the builders' revenues would be tremendous. Whether a return
> to more normal sales will occur because of tax credit extensions,
> low rates, or simply population pressures, who cares? Quite simply,
> they will. Short term influences may do the job quickly; if not,
> certainly longer term pressures will move these sales back at least
> to those which held firmly for the last 45 years. Currently the eleven
> largest publicly traded builders account for about 17% of residential
> building. Their share prices have been smashed. I don't think that
> will continue.

Three Factors that Will Drive New Home Sales

If you look at demographics, take into account the gargantuan shrinkage in money supply through mortgage delinquency etc and study the velocity of money in todays market. then look at production capacity and supply in my opinion all of this makes a pretty strong argument for deflationists.

the reality is that this administration, the federal reserve and just about every think tank with any sway anywhere believes in the inflationary solution to the economic crisis we find ourselves in.

in the tax credit they have found themselves a relatively popular way of putting cash into the hands of consumers. at a time when the pressure to regulate banking transactions is at fever pitch (which will ultimately remove some cash from consumers), there is no way in hell they will allow this tax credit to die. not now and not in april 2010! in an environment with so much uncertainty, it's hard to predict anything these days. the tax credit however, WILL be extended to everyone soon and i expect it to grow in size. i'd wager the crown jewels on that!


On Nov 04 09:25 AM clreed1252 wrote:

> Two of the three factors this article identifies as driving new home
> sales are almost assuredly short term influences. If Congress does
> extend and expand the tax credits, it will only be until April of
> 2010. Low interest rates are being maintained by the Fed's purchase
> of mortgage backed securities; a practice scheduled to end in March
> of 2010.
> The third factor identified in this article, larger U.S. population,
> is negligible. With unemployment at 9.8% and expected to go higher,
> home buying will remain sluggish.

Have We Seen the Housing Bottom?

19 million vacant homes in America today. the only thing that's keeping the price of real estate up is heavy govt intervention. banks should have been forced to liquidate inventories by market forces but the fed stepped in and bailed them out. at the rate the fed/govt is manipulating supply, i wouldn't be surprised if you were right! the problem is that we're all at the mercy of govt action and this makes everything incredibly uncertain