Maybe, just maybe, everybody else is wrong.
I always like to keep that possibility in mind. The times I’ve done best in business is by seeing through emotion and figuring out how the perceived value of something will change. Not it’s actual value, mind you.
So while looking through the commodity indices for something pointing away from a financial catastrophe* I was struck by the way lumber and other building materials mirror consumables like electricity and gas. Makes good sense; if you’re worried about being able to buy gasoline and milk, you’re less inclined to plunk down your life savings on a new house.
But people do need housing. More even than cars, housing is the ultimate “deferrable purchase”, but one that’s still going to happen, mostly.
The question becomes, is there enough of a rebound in the market to make all the not-right-now people step back into the market, and get their first house, or move to a bigger one? The answer seems to be an unqualified “maybe”. Going out to May ‘09, the market is predicting a recovery to levels before the housing crash.
Ah. But why? Some recoveries are due to improving market conditions. Is this one? Or are the markets betting that the dollars will devalue that much in 12 months? Or that the cost of delivering the product will go up that much – perhaps due to energy costs?
I don’t know, honestly. But it’s interesting food for thought.
*I didn’t really find any. Closest would be a mild stabilization in the exploding food prices.
Posted by oopsmybad 