Wednesday, April 15, 2009

Housing market "green shoots"

After roughly 3 1/2 years of the worst housing market recession in U.S. history, we are beginning to see signs that the worst has passed. The National Assoc. of Realtors released their survey of home builders today (first chart) and it came in much higher than expected. Bloomberg's index of the stock prices of major home builders (second chart) today is 9% higher than it was six months ago. Construction activity has been so low for so long that most if not all of the excess inventory of homes has been worked off. Home prices have fallen in many areas by enough to stimulate demand. Spring is in the air in more ways than one.

1 comment:

Steve said...


1) Where does wage inflation factor into the current environment? It doesn't seem to be much of a risk right now...yet I have often heard it carries a great deal of weight when considering potential inflation.

2) If commercial banks lent consumers only 1 of 4 dollars during the past 10 years and the non-banks (securitization) are shut down to a trickle...shouldn't that leave commercial banks regaining market share they lost to securitization? WFC has already posted good numbers. Perhaps the banking sector is healthier than we think.

3) What are your current thoughts on residential RE appreciation for the next few years?

Lastly, I couldn't help but recognize the Luigi Bosca label in one of your recent posts from Argentina. I have enjoyed some wonderful wines from Argentina in recnt years. The 2005 Luigi Bosca Pinot Noir is one of my favorites along with the 2003 Vina Alicia Cabernet Sauvignon. Remarkably, I have been told that Argentina consumes 90% of the wine they produce.

Thanks for taking your time to share your outstanding observations.