I continue remain cautious on the economy in large part because of the softness in the housing market. Doug Kass, general partner of Seabreeze Partners Management, Inc. and commentator for The Edge Column on Street Insight (subscription required—part of TheStreet.com family), wrote an excellent article on housing early on the 28th September. The article Housing Headed to the Woodshed is freely available on TheStreet.com's free site. I urge you to read Doug's article.
Back in April 2005 (on the CNBC special), Lereah and the managements of Hovnavian (HOV - news - Cramer's Take), Prudential Realty and LendingTree were fully convinced (you might say glib) that the housing market was destined for a long boom. They saw a new paradigm of uninterrupted, noncyclical growth. One month later, Lereah was quoted as saying, "We simply don't have enough homes on the market to meet demand."
That was then, and it doesn't pay to dwell on the past. So let's look into the future. Unfortunately, many within the homebuilding business continue to talk their book despite clear trends that do not support their bullish view.
Forgive my preoccupation with the housing markets, but it has had a disproportionate role in economic growth since 2000 (and maybe before). This merits a continued discussion as to the possible slope of the decline, and the nature of the inevitable recovery. The housing cycle, among other variables, is a key influence on aggregate economic activity.
As a plug for Street Insight, I find this service worthwhile and recommend to those that are serious about investing to read it as well.
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