auditor0007
Gold Member
you are partly wrong auditor. part of the problem is people cant get a loan to buy the houses. yes that is part of the problem. you are sorely mistaken if you dont think that is a major problem. YOU MUST RESTORE CREDIT so that businesses can in fact start hiring again and prevent more layoffs. a major business and the same thing will a small one cant get a loan to pay for supplies and payroll. who do you think a business pays its employees? is credit part of the problem. until its fixed you unemployment will not go down. it may not reach normal levels i think until 2011. will everything be back to normal probably not but you have to take baby steps first.
i agree with you in another thread that the lack of savings is also part of the problem.
I understand that the inability to get credit is a problem, both in the home sector and for businesses who need it to hold inventory. However, despite that, the fact is that there are so many homes on the market, that even when credit eases, it's going to take some time to absorb all these homes. That will make it much more difficult for builders to begin building new homes again on a pace that will help on the employment side.
Here is an article from 2007 where it was stated that as much as 40% of home sales may have been purchased by speculators. This was before the bust. If 40% of homes were being purchased by speculators for any extended amount of time, it is easy to see how too many homes were built.
U.S. home builders join speculators in a land grab that went bust - International Herald Tribune
Here is an article dating back to 2005 discussing how speculators were buying a much larger percentage of homes than in the past.
Another article from 2006 discussing how speculators were buying the majority of new homes.
U.S. home builders join speculators in a land grab that went bust - International Herald Tribune
Another article from 2005
Blowing Bubbles - Economic Conditions, Mortgages And Banking - Builder Magazine
The fact is that speculators created excess demand. When the bubble burst, well, it burst. The bottom line is now that prices have fallen, easing credit will help as some new home buyers will be able to purchase these homes. However, many will remain vacant and unpurchased at any price. I still say it's going to take five years before the housing market gets back to normal, and as the housing market goes, so does the rest of the economy.