Upswing in Housing Starts for 2009?

On 12/22/08 UOP posted their Economic Forecast for 2009 - check out the data for housing starts comparing 4Q 2008 to 4Q 2009. They are forecasting housing starts by this time next year to be doubled. See for yourself http://www.sacbee.com/1232/rich_media/1422637.html.

This may seem odd, however, if you take into consideration the fact that we are now entering our fourth year of a housing downturn and home construction has all but come to a screeching halt. Our current inventory of existing homes in Sacramento and San Joaquin county peeked in December of 2007 and current levels are below the 7 year average of housing inventory. As of Dec 2008 we maybe had a 3.5 month supply of homes in our market.

The inventory of homes out there right now are somewhat bleak. For most buyers looking to buy in an area they feel comfortable in, with minimal amount of work to be done, taking into account floor plan and amenities - the facts are that there is just not much to choose from. Absent of pursuing dilapidated REO properties, Short Sales (really Long Sales) or Sellers who will not or who cannot price their home appropriately to entice a Buyer.

There are without a doubt more foreclosures around the corner in 2009 and now with interest rates at 37 year lows some sellers may feel compelled to put their home on the market at a realistic price in the realization that there are active buyers out there. Buyers are very aware of what lower interest rates mean in affordability.