Why the recent HOUSING BULLS were WRONG!!!!
They failed to appreciate the impact of rising material costs. Right now, for many of the components of building a house....costs are up 30%, 50% and more....just talk to a roofer.
Homes built today simply can't be built for anything close to the cost of homes built just a few months ago. Not only that, prices will likely rise dramatically based on Dow chemical's recent price hikes.
We currently have a boatload of newer existing inventory available at pre spike pricing. As we move forward and costs continue to rise and home prices continue to fall....the headwinds facing HBs will continue to grow and the losses will explode as cash flies out the door each time a builder delivers a new house.
Homebuilders now are shrinking the size of the house they sell to try to keep up.....unfortunately most American's are not three feet tall to meet their requirements.
At this point, we have to work through years of over building....my guess it will take years to work through.....once inventory is reduced, at that point we may be able to revisit HBs as a viable business.
FWIW, I make fun of the monkey because he is a pimping chimp as a character on CAPs. He even brags about it. We all have our online images....his was he was never wrong....NEVER WRONG.
Now we know not only was he wrong in the end....he will likely be dead wrong as the industry is now dead for at least the next three or four years until we work through the damn inventory all this reckless lending and borrowing created.
On CAPs we have some fun jabbing each other, and please understand it is all in fun. I really like it when demon and others call me to task, especially when I am out of line in this fantasy world. However, in real life a lot of innocent people, who were simply uninformed, are about to go through some real life pain.
Quite frankly I am not sure how any of this will eventually play out....but the fact that ALL our politicians are silent in this issue speaks volumes about our leaders.