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 October 29, 2008

New Home Inventories Must Decline for Housing to Recover
The latest reports are indicating that new home inventories dropped last month, however, there are still way too many on the housing market. An analyst on Wall Street stated that builders must show some restraint while the current rate catches up with demand.
I was watching tv last week and Suzie Orman was on talking about the state of the market. She said almost the same thing, which was there are still many construction companies that need to go under before the market is able to recover. There are too many homes and the supply will need to drop before things begin to stabilize.

The worry is that builders will not adhere to the advice and continue as normal. If this happens, supplies may once again jump in the next several months and delay the housing market from recovering.

With unemployment on the rise, increases in foreclosures and banks tightening their grip on lending, we have to remain cautious. It was reported yesterday that the government are now telling banks to loosen their grip and quit "hoarding the money". Loosening loan standards should help, but it is not enough to fix everything.