Ken's Naperville Real Estate Blog : KEN'S SOLUTION TO THE HOUSING "CRISIS"

KEN'S SOLUTION TO THE HOUSING "CRISIS"

I have written about the imbalance of supply and demand in the housing market for several months.

Today, the supply of homes on the market far outweighs the demand.  As a result, home prices must come down.

They must.  And they have.

Prices will continue to drop as long as there are more homes to sell than buyers for those homes.

The government is making a great effort to encourage new demand for homes.  They are currently offering tax incentives for first time home buyers, and those incentives will probably grow.

These efforts will help, but only slightly.

Imagine, for a moment, that you are the housing market.  You are lying in a bathtub, and the water is almost over your head.

That is today's housing market.  It is drowning in homes for sale.

The government is doing all they can to lift you above the rising water.  Why not?  Surely, that will prevent you from drowning.

But lifting you is difficult.  You are very heavy and the water is high.

The problem is not that you are in the tub.  Baths are very nice, afterall.

The problem isn't even that the water is too high.  You are still above water, so you will not drown at current levels.

The problem is that the water is still running.

The tap has not been turned off!

I believe in free markets and capitalism.  I am concerned with the government's growing involvement in the markets.

Capitalism has a way of solving economic problems.  Those ways are not always pleasant.  Sometimes they are very painful.

But they are very efficient.

Home builders are still out there building new homes every day.  In this market, I find that unbelievable.

Why are they still building homes?  Don't these companies know that they can't sell them at 2005 prices?

They are still building homes because they are home builders.  That is what they do.

They are lobbying the government (along with the Realtors) to encourage demand for homes.

Please, government, stay out. 

Capitalism will solve this supply/demand imbalance.

Do we need Ryland Homes, Toll Brothers, Town and Country, and D.R. Horton building 800,000 new homes this year?

In today's market?  No way.

Capitalism will solve this problem.

These companies will go away soon.  Very soon.

Supply and demand will come back together.

Ken

To find your next home, go to my Naperville real estate website anytime.

 

Comment balloon 17 commentsKen Tracy • November 19 2008 07:53AM

Comments

Ken- I agree with you that the government is getting way too involved in "assisting" us.  With that "assistance" is going to come a lot of rules, laws, etc... that we may or may not want. And I think the government is sending a very bad message with bailing out so much. I'm trying to teach my kids to be responsible for themselves, their bills, their responsibilities and their waste. I don't need them out their huggin trees but they should recycle what they use and give back when they can versus waiting on the government or any other entity to come and get them out of whatever mess they have created for themselves!

Posted by Tessa Thompson (Real Living Partners Triangle) about 9 years ago

There will be many treading water for a few years, that's for sure!

Posted by Kelly Sibilsky (Licensed Through Referral Connection, LTD.) about 9 years ago

Hi Tessa and Kelly.  Thanks for reading.

The new home starts came out this morning.

The less starts, the better if you ask me.

We don't need them.

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) about 9 years ago

Ken, you said it very well, the supply and demand will always level out the market. The government does need to go back to governing!!

Posted by Caren Wallace, Portland Caren Real Estate (Premier Property Group LLC) about 9 years ago

Hi Caren.  Thanks for reading.

I saw the housing starts today, and heard they were down.

Down, why are they starting any?

Thanks again,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) about 9 years ago

Kind of like building a car that no one wants.  Why build it if you can't sell it.

Posted by John Walters, Licensed in Louisiana (Frank Rubi Real Estate) about 9 years ago

Hi John.  Right on.

Speaking of cars, wow, are the big 3 getting taken to the woodshed.

Thanks for reading,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) about 9 years ago

Ken, Capitalism will correct itself and in the process there may be fewer builders.

Posted by Don Rogers, Realtor, Broker, CDPE, GRI, OnullFallon MO & St Charles County MO homes (Keller Williams Realty Chesterfield) about 9 years ago

They are still building homes because they are home builders.  That is what they do.

LOL

So true!  :)

Posted by Not Yet Licensed about 9 years ago

Hi Ken... you are correct.  This is simple Economics 101 stuff.  Why do so few people in the government get that?

Posted by Steve Shatsky about 9 years ago

Hi Don, Steve, and Bruce.

My point is the builders are screwed. 

Sad, but true.

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) about 9 years ago

Ken - You're quite zen today.  Are they building because they are going to be asking for a bail out too? D'oh.

Posted by Alyce Martin, Albuquerque - THE Place To Be! (The Realty Group, LLC) about 9 years ago

Ken,

WOW. Very poignant. Your posts just keep getting better and better. I hope others take notice of your advice!

Posted by Cherimie Crane (Cherimie Crane & Associates) about 9 years ago

It is really hard for people to take but it is true.  I don't know when people started thinking it couldn't be painful.  It can and it will.  It is the same with sellers who refuse to list their house at the CURRANT market value.  It is hard to accept but the demand is not there.  Deal with it.

Posted by Tony and Libby Kelly, CRS, ABR, ePro, SRES, CLHMS, CDPE (Keller Williams Realty Portland Premiere) about 9 years ago

Hi Tony and Libby, Cherimie, and Alyce.  Thanks for reading.

You guys are all getting nicer and nicer. 

Poignant and zen!:)

Thanks guys!

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) about 9 years ago

I believe in free markets and capitalism.  I am concerned with the government's growing involvement in the markets.

Good evening Ken,

I agree.  Unfortunately, we are sliding into socialism.  Do you think we're going to see builder bailouts?

Respectfully,

Bruce

Posted by Not Yet Licensed about 9 years ago

Hi Bruce.  I hope not. 

I needed a bailout in June!

Thanks for reading,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) about 9 years ago

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