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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: ggamer who wrote (46205)	11/28/2005 7:22:07 PM
From: CalculatedRisk	Read Replies (2) of 110194

I think the peak of housing activity is behind us, but that the housing market still has some legs. It will take some time (a couple of years) before the speculative buyers start to get into trouble. I'm not talking about the flippers, but the marginal buyers that reached to buy with exotic mortgages. Right now we are seeing rising inventories - but sales are still very strong (7 million annual rate for existing homes). So the months of inventory is still within normal ranges (4.9 months) on a national level. I believe inventories will surge next spring - and, if so, then we can expect to see some nationwide price declines. Right now the price declines are limited to a few markets with excessive inventory (like Boston with 8+ months). I don't expect a crash in prices - unless the housing slowdown feeds back into the general economy. This could happen with layoffs in housing related employment (construction, mortgage brokers, etc) and because of less retail spending due to lower equity extraction. That is definitely NOT happening yet.

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