Housing confusion

Heard NPR report this morning that gloomily lamented the fact that housing starts were down some record amount last month, but I don't understand the arm-waving about this. Don't we need fewer new homes until the housing market in general settles down? When prices have been plummeting and are seeking a bottom, MORE new houses is the last thing we need -- boosting supply would just push prices down even more.


Blogger Bill Karwin said...

You're thinking demand-side economics. Yes, a further glut of housing would depress prices more, and there's not much point building a house if the real estate market in free fall would make it impossible for a developer's net revenue to be in the black.

But on the supply-side, fewer housing starts means fewer construction jobs, fewer mortgages, and other cascading depressive effects.

February 18, 2009 at 10:43 AM  
Blogger Jeff said...

Hey Matt Ive heard you talk a lot about helping sturggling home owners. But what about helping struggling RENTERS? Or struggling FUTURE home owners? I want housing prices to come down! They are too high! My generation helped get Obama elected. Why should we have to pay the debt for a bunch of people who bought overpriced houses and at the same time make it more difficult for ourselves in the process. Help us out Matt! Whose on our side here!

February 21, 2009 at 1:18 AM  

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