Arizona home builders belatedly face reality

{ 4 comments… read them below or add one }

1 Cbass 11.15.06 at 4:32 pm: Many think the whole building less houses is a good thing and a proper response by the HB industry? Maybe, but I question this as the people who were actually doing the building of all these houses must work so they can pay their bills. A 44% drop in production must have some effect on employment. I am not sure what the answer is but it looks like it’s a “catch 22” type thing.

Build less= people lose jobs, spend less money thus hurting economic growth, housing prices eventually go down.

Build more= housing prices drop like a rock?
2 John L. Wake 11.15.06 at 5:31 pm: Okay, Clay, can you give me a scenario where housing prices don’t go down?
3 Cbass 11.15.06 at 7:16 pm: No
They are to overpriced.
4 Cbass 11.15.06 at 7:21 pm: Just kidding John.

There is one scenario that I can think of but it does not sound like the Fed is interested.

http://tinyurl.com/yngu8q

They could let inflation run wild and that would close the gap in affordability while housing prices sit stagnant for a bit, thus no actual price decline. Then when wages have cought up we can resume a “normal” market.