To: Road Walker who wrote (122 ) 2/26/2009 11:41:03 AM From: tejek Respond to Home Inventory Shrinking Importantly, inventories continued to decline on an outright basis and are now near normal levels after having moved materially above normal levels in 2006. The total number of unsold homes was 342,000 in January, down from 353,000 in December and its lowest tally since May 2003. The peak was 570,000 in June 2006. The current level is below both the 25-year average of 355,000 and the 15-year average of 369,000. Inventories are falling because builders are severely under-building relative to population growth and household formation. I ask again, where will the country's 3 million additional inhabitants live when they enter the country this year? It is a simple fact of human existence that people need shelter. Skeptics will say that foreclosure sales, phantom inventory (homes that people would like to sell but can't) and difficulties obtaining credit will stymie this trend. Those who do miss the main point regarding the need for shelter: People will fill up empty space one way or another, whether through renting or buying. Sales needn't increase to fix the inventory problem, although sales are obviously needed to let the inventory dynamic take power over forced sales from a price perspective. Still, ultimately, supply will win out, and it is shrinking for both new and existing homes, despite the very factors that skeptics will say will stymie future declines.
