The virtues of overbuilding and another price prediction
Here are two more interesting takes on the housing downturn.
The Wall Street Journal compares the performance of the West, where there was a huge surge of new housing, with that of the Northeast, which did not see overbuilding, and draws some interesting conclusions.
In the Northeast, the inventory of homes for sale has risen 17 percent since 2005, compared to more than 70 percent in the West.
Still, the Journal piece notes that overbuilding, coupled with foreclosures, has brought prices down hard and fast in the West. Sales there are rising again, while still falling in the Northeast.
The Northeast may think it has escaped the worst, but the housing market pain here may simply be more prolonged, if not as sharp, the piece suggests.
Meanwhile, Barclays Capital economist Michelle Meyer is offering yet another prediction on how much further housing prices will fall before finally bottoming out.
She’s estimating a 40 percent drop from peak to trough by the time foreclosures peak in the seond half of 2010.
That means another 10 percent or more off current prices.
Happy Monday morning.
