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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (6066)	5/10/2004 10:19:30 PM
From: CalculatedRisk	Respond to of 116555

I agree. I expect inventories to rapidly increase. That is one of the reasons I posted that nonsense from the two Freddie Mac economists: freddiemac.com One of their arguments (and their first graph) showed that "Inventories of Homes-For-Sale Are Very Low". That is true, but it is about to change!

To: Elroy Jetson who wrote (6066)	5/10/2004 11:21:25 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

t major home builders have ramped up their production to triple their output this year, after six years of caution. That is not the way the industry works. I have a homebuilder on my thread on the FOOL and he assures me that these major developers have presold practically everything. These houses are not being built on speculation but on cold hard sales. I do not know what % of smaller homebuilders there are out there building a few homes each year on spec and trying to sell them. I am sure there is some of that but do not know how much. At any rate, this "supply" you refer to is likely already sold. That said, at some point demand will drop. Are we there yet? Perhaps people are buying new houses thinking they can sell their old one. If that is what is happening, then at the turn there will start to be mammoth numbers of homes offered for sale. Bad situation for those that get caught with two mortgages. I have not really thought about this angle yet so I will try and get feedback on this post from my homebuilder. At any rate, IMO it will all start with an inventory of EXISTING homes, not new homes developed on spec. Mish