Battlepanda: The crash around the corner?


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Friday, November 11, 2005

The crash around the corner?

Calculated Risk, as ever, is on the beat when it comes to the latest on the housing bubble. Reading through his blog, it seems like we're seeing rising housing inventories in housing market after housing market. Nobody likes being told that their house was worth 275,000 dollars last months but is only worth 250,000 dollars this month. Nay, they won't accept it. This is why when supply outstrips demand, you don't have falling prices at first, but more houses remaining on the market unsold. In Massachusetts, the inventory to sales time is already 8 months. In North Virginia, there are more than twice as many homes on the market as there were this time last year. In Pheonix, there has been a threefold increase in a matter of months. In Tuscon, inventories have reached a 10-year high.

But rising inventories can't go on for ever. Eventually, people will realize the state of the market is not going to get better and start selling their house for whatever they can get for it. Thus big backlogs of unsold houses are a powerful prelude for the bona fide bursting of the housing bubble.

I won't insult you by spelling out the knock-on effects a suddenly-weak housing market is likely to have on our economy.