Monday, September 22, 2008


It took until 1976, two years after the end of the 1973-74 real estate recession, for home inventories to reach bottom. In 1993, home inventories finally reached bottom two years after the end of the 1990-91 real estate recession. The bottom in stock prices was made more than two years before the turn in housing construction.

In 2006, new home inventories hit their peak. Inventories have been falling for two years. Home builders have sold off land and laid off employees. The prices of homes are set like all other goods, by supply and demand. It will be another year or two before inventories reach bottom but home values will jump between now and then. The big catch-up will be that the spread between a used home and a new home will narrow. For those who need a home and are willing to buy a "used" home, conditions are the best in 18 years and will not be this good again for another 18 years!