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My latest in Slate, on the guns to caviar index.
Posted by dan at 05:10 PM
Some strange comments from Toll Brothers CEO Robert Toll in today's Wall Street Journal. Apparently, the slowdown in the housing market has very little to do with the rising un-affordability of housing prices in many markets, or with the rising cost of short-term money, or with the fact that many consumers, tapped out from years of borrowing and stagnating wages, have reached the end of their ability to take out ever-funkier loans to pay market prices. No, it has to do with politics, and the incompetence of the Bush administration.
Toll: We are bouncing along the bottom. I would expect the inventory overhang, which is what is killing the confidence level, to be absorbed during the first several months of the next buying season. If that inventory is eaten up, and I expect it will be, then I think you will see an alarming rate of change in the supply-demand equation in house pricing. I think what we are in right now is an artificial inversion. To a large extent, it all depends on our perception of ourselves. It has a lot to do with politics.WSJ: Politics?
Mr. Toll: We actually saw, and this could be a coincidental juxtaposition of happenstance, but we actually saw a bounce the weekend after the change in control of the House and Senate.
I think that the country went into a funk after Katrina when we looked like Bangladesh in a storm -- bodies floating upside down, the government seemingly unable to do anything about it. That was the turning point from those glorious days of yesterday when we said we can't go wrong buying this house with 5% down and selling it for $100,000 more in six months. I think with Katrina, we lost confidence in ourselves and said maybe we should take our chips off the table and sell now, and everybody went to the window at the same time.
Posted by dan at 09:59 AM