Okay, on one level the situation is simple--we have to many houses in the United States right now. This inventory will lead to further depressed prices and a continuation of the recession in new home starts until 2014. This is according to information I've been reading at places like Beat the Press and Calculated Risk.
In a previous post I had entertained the notion that there might be a trend right now towards a supply restriction in the number of new houses being planned and built over the next few years (Economist Brad Delong has referred to this possibility). Both cannot be true, but due to the size and complexity of the shelter architecture market in the U.S. it is possible for both circumstances to exist in different geographic regions.
The Northeast has supply constraints that will prop up house prices and rents for the forseeable future. The south will have depressed and declining prices for the next five years. California is just weird, the mid-Atlantic states will probably experience a rebound. These are just my feelings. We'll see how it plays out. At night, I pray for inflation so that this mess will be resolved that much sooner.
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