Dec. 30 (Bloomberg) -- The dollar traded near a two-week low versus the euro on speculation the global recovery is gathering momentum, boosting demand for higher-yielding assets.
The U.S. currency extended losses this year against 12 of its 16 major counterparts after a South Korean report showed industrial production rose for a 17th straight month, adding to signs that Asian economies are picking up. The Australian dollar traded near the highest since 1982 versus the greenback before a U.S. report that's forecast to show initial jobless claims fell.
"There are a lot of real-money managers who are looking to put on long Asian-currencies positions going into 2011," said Kurt Magnus, executive director of foreign-exchange sales at Nomura Holdings Inc. in Sydney. "It's a lot to do with growth. There's a clear move away from the dollar into Asia."
The dollar bought $1.3222 per euro at 8:53 a.m. in Tokyo from $1.3225 in New York yesterday, after reaching $1.3275 on Dec. 28, the lowest level since Dec. 17.
Japan's currency was at 81.65 yen per dollar from 81.62 yesterday, after earlier touching 81.61, matching the strongest since Nov. 10. The yen has risen 13.9 percent this year, the best performance among its major peers versus the dollar. The euro fetched 107.97 yen from 107.94 yen.
Australia's dollar was at $1.0174 from $1.0179 yesterday, when it rose to $1.0184, the highest level since July 1982 before the December 1983 move by the nation to stop pegging the so-called Aussie to a trade-weighted basket of currencies.
The U.S. currency has lost 2.4 percent in 2010, according Bloomberg Correlation-Weighted Indexes. The yen has surged 12.8 percent this year, according to the index, which measures currency performance of 10 major trading partners, and the euro has slumped 10.7 percent in the period.
South Korea's industrial output expanded 10.4 percent in November from a year earlier, statistics Korea said in Gwacheon today. First-time filings for U.S. jobless insurance decreased to 415,000 in the week ended Dec. 25 from 420,000 in the previous week, according to a Bloomberg News survey of economists before the Labor Department report today.
Source: www.sfgate.com
Thursday, December 30, 2010
Wednesday, December 29, 2010
Strong 2011 net farm income could help lead to economic recovery
The farm sector will be a bright spot in the Missouri economy in 2011, says a University of Missouri economist.
“Net farm income is expected to exceed $3 billion, a milestone reached for the third time since 2004,” says Scott Brown, with MU Food and Agricultural Policy Research Institute (FAPRI). “More incredible is that farm income never topped $1.5 billion prior to 2004.”
Planted areas for soybeans, corn, wheat, cotton, rice, sorghum and harvested hay are expected to total near 14 million acres in 2011, Brown said. That is an increase of over 650,000 acres above 2010.
“This threshold has only been reached twice before in the last 25 years. Although 14 million was a common planted acreage in the state before 1986 when the Conservation Reserve Program began to expand.”
While a large part of the agricultural recovery comes on the crops side, Brown said, that higher feed prices will constrain expansion of the livestock sector.
However, prices paid for meat will continue to climb, as the U.S. economic recovery continues and a growing foreign demand.
As demand expands in the next couple of years, producers will see prices that offset higher input costs.
“While production costs have gone up sharply in recent years, the rate of increase should begin to drop, providing energy prices and other inputs remain stable.
In any outlook, farmers should keep in mind unpredictable weather, surges in energy prices and unexpected disease outbreaks, Brown said. All have negative impact on profitability.
“In spite of the bright outlook, Missouri producers should prepare for volatility that has hit agriculture recently.” Missouri production expenses increased from $5.5 billion in 2005 to nearly $7.5 billion in 2008, an increase of over 35 percent in three years,” Brown said.
In the past when crop prices increased rapidly, inflation grew. While some inflation is seen, there is nothing like previous times, Brown said.
The growth in crop acres comes not just from released CRP ground but also a return of double-crop acres. Because of weather, double-crop acres fell in 2009 and 2010.
In the USDA conservation reserve, farmers are paid rent to keep erodible land in grass instead of row crops.
Government payments to farmers will be down. With changes in the economy, Missouri producers are expected to see some of the lowest levels in government payments since 1998 during the next few years. High market prices for most commodities have reduced payments to only 5 percent of the total income for the farm sector from 2007 to 2009.
MU FAPRI maintains economic models of livestock and grains. The models give 10-year baseline projections for the U.S. Congress. FAPRI provides independent analysis of proposed farm legislation, including the farm bill. FAPRI is a part of the MU College of Agriculture, Food and Natural Resources.
Source: WesternFarmPress.com
http://westernfarmpress.com
“Net farm income is expected to exceed $3 billion, a milestone reached for the third time since 2004,” says Scott Brown, with MU Food and Agricultural Policy Research Institute (FAPRI). “More incredible is that farm income never topped $1.5 billion prior to 2004.”
Planted areas for soybeans, corn, wheat, cotton, rice, sorghum and harvested hay are expected to total near 14 million acres in 2011, Brown said. That is an increase of over 650,000 acres above 2010.
“This threshold has only been reached twice before in the last 25 years. Although 14 million was a common planted acreage in the state before 1986 when the Conservation Reserve Program began to expand.”
While a large part of the agricultural recovery comes on the crops side, Brown said, that higher feed prices will constrain expansion of the livestock sector.
However, prices paid for meat will continue to climb, as the U.S. economic recovery continues and a growing foreign demand.
As demand expands in the next couple of years, producers will see prices that offset higher input costs.
“While production costs have gone up sharply in recent years, the rate of increase should begin to drop, providing energy prices and other inputs remain stable.
In any outlook, farmers should keep in mind unpredictable weather, surges in energy prices and unexpected disease outbreaks, Brown said. All have negative impact on profitability.
“In spite of the bright outlook, Missouri producers should prepare for volatility that has hit agriculture recently.” Missouri production expenses increased from $5.5 billion in 2005 to nearly $7.5 billion in 2008, an increase of over 35 percent in three years,” Brown said.
In the past when crop prices increased rapidly, inflation grew. While some inflation is seen, there is nothing like previous times, Brown said.
The growth in crop acres comes not just from released CRP ground but also a return of double-crop acres. Because of weather, double-crop acres fell in 2009 and 2010.
In the USDA conservation reserve, farmers are paid rent to keep erodible land in grass instead of row crops.
Government payments to farmers will be down. With changes in the economy, Missouri producers are expected to see some of the lowest levels in government payments since 1998 during the next few years. High market prices for most commodities have reduced payments to only 5 percent of the total income for the farm sector from 2007 to 2009.
MU FAPRI maintains economic models of livestock and grains. The models give 10-year baseline projections for the U.S. Congress. FAPRI provides independent analysis of proposed farm legislation, including the farm bill. FAPRI is a part of the MU College of Agriculture, Food and Natural Resources.
Source: WesternFarmPress.com
http://westernfarmpress.com
Tuesday, December 28, 2010
Northeastern Wisconsin economic recovery starts
The economy in Northeastern Wisconsin took a step toward improvement in 2010, and most hope it means an even more robust 2011.
The Green Bay area unemployment rate at the end of the year was at a level that 15 years ago would have been considered near full employment. But standards have changed, and 6.7 percent no longer meets expectations.
It is an improvement from 7.5 percent in November 2009 and the recent high of 9.1 percent in March 2009, but still means that at least 11,500 people in Brown, Kewaunee and Oconto counties are without jobs.
On the plus side, 159,800 people are working, up from 155,600 one year ago, reflecting a national trend of slow job growth.
The Green Bay area did not experience the mass layoffs during the recession that were seen in places such as Janesville, which lost its General Motors manufacturing plant. During the past year, a number companies, such as Humana Inc., SMT Machine & Tool Inc. of Howard and EMT International of Hobart, increased employment.
Banks in Northeastern Wisconsin continued working to get a handle on its balance sheets, but, as with manufacturing, the area suffered less than other regions.
One of the year's biggest business events for the region occurred this month, when Marshall & Ilsley Corp. announced it was being sold to BMO Financial Group in a $4.1 billion deal. BMO is the parent company of Bank of Montreal in Canada and Harris Bank in the United States.
M&I is the largest bank based in Wisconsin and has branches throughout the northeastern part of the state. The deal is expected to close at the end of July and will leave Associated Banc-Corp of Ashwaubenon as the state's largest home-based financial services company.
Another bank's problems provided an opportunity for Nicolet National Bank of Green Bay, which purchased four metro area branches of Madison-based AnchorBank, which was selling assets to keep from being among those taken over by regulators. The move more than doubled Nicolet's physical presence in the community.
The banking crisis is not over. The Wall Street Journal reported Monday that 100 mostly smaller banks that received federal government bailout funds, including Legacy Bank of Milwaukee, are in danger of failing.
Home sales continued to lag in the region, as they have across the country. The collapse of the real estate bubble was one of the main causes of the recession, and its effects continue to be felt. According to the Wisconsin Realtors Association, 1,967 houses were sold in Brown County in 2010, compared with 2,382 in 2009 and 2,692 in 2007. December totals are not complete, but they would have to surpass any December in the last three years to bring 2010 total sales on par with 2009.
Real estate analysts have said throughout the recession and recovery that home prices held better in Wisconsin than many other states, and that's reflected in the Brown County numbers. Median home prices in Brown County in 2010 averaged $139,000, compared with $135,000 in 2009. They still trail 2007, though, when the average price was nearly $11,000 more.
A sign that consumers are spending a bit more is improving sales tax collections.
After seeing its receipts fall 7.3 percent from 2008 to 2009, the Green Bay/Brown County Professional Football Stadium District was down only 1 percent from 2009 to 2010.
Source: www.greenbaypressgazette.com
The Green Bay area unemployment rate at the end of the year was at a level that 15 years ago would have been considered near full employment. But standards have changed, and 6.7 percent no longer meets expectations.
It is an improvement from 7.5 percent in November 2009 and the recent high of 9.1 percent in March 2009, but still means that at least 11,500 people in Brown, Kewaunee and Oconto counties are without jobs.
On the plus side, 159,800 people are working, up from 155,600 one year ago, reflecting a national trend of slow job growth.
The Green Bay area did not experience the mass layoffs during the recession that were seen in places such as Janesville, which lost its General Motors manufacturing plant. During the past year, a number companies, such as Humana Inc., SMT Machine & Tool Inc. of Howard and EMT International of Hobart, increased employment.
Banks in Northeastern Wisconsin continued working to get a handle on its balance sheets, but, as with manufacturing, the area suffered less than other regions.
One of the year's biggest business events for the region occurred this month, when Marshall & Ilsley Corp. announced it was being sold to BMO Financial Group in a $4.1 billion deal. BMO is the parent company of Bank of Montreal in Canada and Harris Bank in the United States.
M&I is the largest bank based in Wisconsin and has branches throughout the northeastern part of the state. The deal is expected to close at the end of July and will leave Associated Banc-Corp of Ashwaubenon as the state's largest home-based financial services company.
Another bank's problems provided an opportunity for Nicolet National Bank of Green Bay, which purchased four metro area branches of Madison-based AnchorBank, which was selling assets to keep from being among those taken over by regulators. The move more than doubled Nicolet's physical presence in the community.
The banking crisis is not over. The Wall Street Journal reported Monday that 100 mostly smaller banks that received federal government bailout funds, including Legacy Bank of Milwaukee, are in danger of failing.
Home sales continued to lag in the region, as they have across the country. The collapse of the real estate bubble was one of the main causes of the recession, and its effects continue to be felt. According to the Wisconsin Realtors Association, 1,967 houses were sold in Brown County in 2010, compared with 2,382 in 2009 and 2,692 in 2007. December totals are not complete, but they would have to surpass any December in the last three years to bring 2010 total sales on par with 2009.
Real estate analysts have said throughout the recession and recovery that home prices held better in Wisconsin than many other states, and that's reflected in the Brown County numbers. Median home prices in Brown County in 2010 averaged $139,000, compared with $135,000 in 2009. They still trail 2007, though, when the average price was nearly $11,000 more.
A sign that consumers are spending a bit more is improving sales tax collections.
After seeing its receipts fall 7.3 percent from 2008 to 2009, the Green Bay/Brown County Professional Football Stadium District was down only 1 percent from 2009 to 2010.
Source: www.greenbaypressgazette.com
Monday, December 27, 2010
Momentum May Drive a Tech-Industry Recovery in 2011
Executives in the tech industry expect the year-end momentum to carry over into 2011 with growth in both revenue and employment. A KPMG survey found that executives expect cloud computing and mobile applications to lead the way with growth rates above 10 percent. An analyst said the numbers indicate big business is buying again.
It's a thought-provoking headline, isn't it? After some ups and downs in 2010 -- welcome after the dips and twists of 2009 -- many industry watchers are bullish on a tech-industry recovery in 2011. The momentum that started to build in the second half of 2010 should continue next year as corporations and consumers alike loosen the purse strings.
Based on the information KPMG has received from U.S technology executives, Gary Matuszak, KPMG global chair for the information, communication and entertainment practice, is optimistic. In KPMG's most recent survey of tech executives, the firm found that business leaders expect significant improvement in 2010 over last year in revenue and employment, and they are more optimistic about next year.
"Almost nine out of 10 executives said they expect business conditions in the technology sector to improve in 2011, including stronger revenue," Matuszak said. "When participants were asked to name the biggest drivers of revenue growth over the next three years in the technology sector, 54 percent named cloud Relevant Products/Services computing, 51 percent said mobile Relevant Products/Services applications, 43 percent identified client computing/virtualization, and 42 percent said advanced analytics. About half the respondents believe the growth rate for both cloud computing and mobile applications could exceed 10 percent over the next two years."
Semiconductors Tell the Story
KPMG also recently completed a global survey of the semiconductor industry. Executives from that industry also expect solid increases in sales and workforce Relevant Products/Services growth in 2011. According to the KPMG survey, conducted in collaboration with the Semiconductor Industry Association, 78 percent of semiconductor executives expect revenue to grow by more than five percent next year.
"In looking at jobs, 29 percent of the respondents predict workforce growth of greater than five percent, compared to 23 percent in 2009," Matuszak said. "Our findings show that the semiconductor industry expects moderate growth next year, which is extraordinary in the context of an uneven global economic recovery. The continuing demand for electronic products ranging from tablets to smartphones, and an increased demand for technology integration in automobiles, will buoy semiconductor manufacturers as the economy fluctuates."
Bellwethers and Startups
Rob Enderle, principal analyst at the Enderle Group, said 2011 looks like a great year for tech sales and intellectual-property attorneys. Year-end numbers are looking good from the majors right now, with the exception of Best Buy -- which took a hit from online sellers like Amazon -- and Yahoo, which is being horridly run, Enderle said.
"HP, IBM, Oracle outside of hardware, and Microsoft Relevant Products/Services have all been strong coming into the end of the year, suggesting big business is buying again and the pent-up demand from lots of years of not replacing aging hardware should make for a strong 2011 if we don't have another financial crisis," Enderle said. "This last is a bit of a risk because the U.S. government isn't cooperating with itself very well at the moment and concerns of a double-dip recession are mounting as a result, which doesn't bode well for next year's sales."
Meanwhile, from an educational perspective, Professor Jonathan Askin at the Brooklyn Law School said he's already seeing early rumblings of a tech recovery, as angel and venture-capital money begins to flow back into the tech startup community.
"We see more and more startups being eyed as acquisition targets," Askin said. "Perhaps the only silver lining in our current unemployment situation is that many innovators and would-be entrepreneurs have seized the moment to work on their own ventures in the absence of having to report to work."
Source: NewsFactor Network
http://www.newsfactor.com
It's a thought-provoking headline, isn't it? After some ups and downs in 2010 -- welcome after the dips and twists of 2009 -- many industry watchers are bullish on a tech-industry recovery in 2011. The momentum that started to build in the second half of 2010 should continue next year as corporations and consumers alike loosen the purse strings.
Based on the information KPMG has received from U.S technology executives, Gary Matuszak, KPMG global chair for the information, communication and entertainment practice, is optimistic. In KPMG's most recent survey of tech executives, the firm found that business leaders expect significant improvement in 2010 over last year in revenue and employment, and they are more optimistic about next year.
"Almost nine out of 10 executives said they expect business conditions in the technology sector to improve in 2011, including stronger revenue," Matuszak said. "When participants were asked to name the biggest drivers of revenue growth over the next three years in the technology sector, 54 percent named cloud Relevant Products/Services computing, 51 percent said mobile Relevant Products/Services applications, 43 percent identified client computing/virtualization, and 42 percent said advanced analytics. About half the respondents believe the growth rate for both cloud computing and mobile applications could exceed 10 percent over the next two years."
Semiconductors Tell the Story
KPMG also recently completed a global survey of the semiconductor industry. Executives from that industry also expect solid increases in sales and workforce Relevant Products/Services growth in 2011. According to the KPMG survey, conducted in collaboration with the Semiconductor Industry Association, 78 percent of semiconductor executives expect revenue to grow by more than five percent next year.
"In looking at jobs, 29 percent of the respondents predict workforce growth of greater than five percent, compared to 23 percent in 2009," Matuszak said. "Our findings show that the semiconductor industry expects moderate growth next year, which is extraordinary in the context of an uneven global economic recovery. The continuing demand for electronic products ranging from tablets to smartphones, and an increased demand for technology integration in automobiles, will buoy semiconductor manufacturers as the economy fluctuates."
Bellwethers and Startups
Rob Enderle, principal analyst at the Enderle Group, said 2011 looks like a great year for tech sales and intellectual-property attorneys. Year-end numbers are looking good from the majors right now, with the exception of Best Buy -- which took a hit from online sellers like Amazon -- and Yahoo, which is being horridly run, Enderle said.
"HP, IBM, Oracle outside of hardware, and Microsoft Relevant Products/Services have all been strong coming into the end of the year, suggesting big business is buying again and the pent-up demand from lots of years of not replacing aging hardware should make for a strong 2011 if we don't have another financial crisis," Enderle said. "This last is a bit of a risk because the U.S. government isn't cooperating with itself very well at the moment and concerns of a double-dip recession are mounting as a result, which doesn't bode well for next year's sales."
Meanwhile, from an educational perspective, Professor Jonathan Askin at the Brooklyn Law School said he's already seeing early rumblings of a tech recovery, as angel and venture-capital money begins to flow back into the tech startup community.
"We see more and more startups being eyed as acquisition targets," Askin said. "Perhaps the only silver lining in our current unemployment situation is that many innovators and would-be entrepreneurs have seized the moment to work on their own ventures in the absence of having to report to work."
Source: NewsFactor Network
http://www.newsfactor.com
Friday, December 24, 2010
No easy way for investors to bet on U.S. housing recovery
As enthusiasm for a U.S. recovery builds and market watchers predict double-digit equity gains for 2011, the U.S. housing market plods along the bottom, resolutely failing to produce any compelling evidence of a rebound.
It’s a positively fascinating situation, provided you aren’t an American homeowner. And it would seem to give Canadian vulture investors an opportunity, as there are a dozen publicly traded U.S. home builders who were crushed by the bust.
The problem with this investment theory: It’s difficult to put in place, and likely unwise to do so.
One issue is valuation. The beaten-down home builder stocks have already been speculative fodder: Some doubled and tripled in 2009, with others jumping 50 per cent or more. Nearly all built on those gains in 2010. The result: The average gain for a home building stock from the end of 2008 to today is roughly 67 per cent.
Another problem, which should go without saying to the sophisticated investor: The stocks in this sector don’t move uniformly, thanks to the usual suspects of operational performance and balance sheet health, as well as the choices each company has made as to where to operate. Certain companies have been far more exposed to the overblown and overbuilt markets of Florida and the American Southwest.
This year’s returns in the sector range from a 27-per-cent drop at PulteGroup (PHM-N7.38----%) – where losses are widening, not narrowing – to a 44-per-cent gain at Lennar Corp. (LEN-N18.17----%) which returned to profitability this year.
Rather than try to assess the prospects for multiple U.S. metro real estate markets, a Canadian investor might just try to buy in to U.S. home building by choosing one of several exchange-traded funds. Herein lies the least-known of the problems: Home builder ETFs don’t actually provide enough exposure to U.S. home builders.
Let’s take three major ones as examples.
The iShares Dow Jones U.S. Home Construction Index Fund (ITB-N13.21----%) puts just two-thirds of its money into what it calls “home construction,” with the rest spread among building materials, home improvement retailers and sellers of furnishings. Home Depot Inc. and Lowe’s Cos. Inc. are among its top 11 holdings.
The SPDR S&P Homebuilders ETF (XHB-N17.46----%) has less than one-third of its money in home builders; building products companies make up nearly as much of the portfolio. Only half of the top 10 holdings are home builders.
And the PowerShares Dynamic Building & Construction Portfolio (PKB-N12.96----%) fund, often lumped in with home builder ETFs, owns just two home builder stocks, making up 10 per cent of the portfolio. Industrials make up more than 60 per cent of the fund.
This issue – there are plenty of non-home-builder stocks driving performance at these ETFs – has actually benefited the funds’ owners this year. In the fourth quarter, the iShares fund is up around 9 per cent, with the SPDR above 11 per cent and the PowerShares topping 14 per cent. The average home builder gain in the quarter is about 8 per cent.
The PowerShares fund was helped in the quarter by double-digit gains from Home Depot and Lowe’s, as well as a 30-per-cent gain from Fluor Corp., which is an industrial construction company with little involvement in residential building.
All of this means there’s no easy way for Canadians to buy in to the U.S. home building sector in anticipation of its recovery. Yet that raises a larger question: Is there even a rebound coming any time soon?
Economists Vernon Smith and Steven Gjerstad of California’s Chapman University are among those who believe U.S. housing is in for a long, hard slog. They point out the typical level of annualized new-home sales has been about 700,000 to 800,000 units, compared with the current rate of about 275,000 units. With two million houses either on bank balance sheets or predicted to be headed there, it would take five years to absorb the inventory under normal economic conditions. High unemployment and consumer debt may make the time frame eight to 10 years, instead.
That suggests an extended period where home builders have a rough time selling their products. And a period when investors in home building stocks wait, and wait, for their gains.
Source: The Globe and Mail's
http://www.theglobeandmail.com
It’s a positively fascinating situation, provided you aren’t an American homeowner. And it would seem to give Canadian vulture investors an opportunity, as there are a dozen publicly traded U.S. home builders who were crushed by the bust.
The problem with this investment theory: It’s difficult to put in place, and likely unwise to do so.
One issue is valuation. The beaten-down home builder stocks have already been speculative fodder: Some doubled and tripled in 2009, with others jumping 50 per cent or more. Nearly all built on those gains in 2010. The result: The average gain for a home building stock from the end of 2008 to today is roughly 67 per cent.
Another problem, which should go without saying to the sophisticated investor: The stocks in this sector don’t move uniformly, thanks to the usual suspects of operational performance and balance sheet health, as well as the choices each company has made as to where to operate. Certain companies have been far more exposed to the overblown and overbuilt markets of Florida and the American Southwest.
This year’s returns in the sector range from a 27-per-cent drop at PulteGroup (PHM-N7.38----%) – where losses are widening, not narrowing – to a 44-per-cent gain at Lennar Corp. (LEN-N18.17----%) which returned to profitability this year.
Rather than try to assess the prospects for multiple U.S. metro real estate markets, a Canadian investor might just try to buy in to U.S. home building by choosing one of several exchange-traded funds. Herein lies the least-known of the problems: Home builder ETFs don’t actually provide enough exposure to U.S. home builders.
Let’s take three major ones as examples.
The iShares Dow Jones U.S. Home Construction Index Fund (ITB-N13.21----%) puts just two-thirds of its money into what it calls “home construction,” with the rest spread among building materials, home improvement retailers and sellers of furnishings. Home Depot Inc. and Lowe’s Cos. Inc. are among its top 11 holdings.
The SPDR S&P Homebuilders ETF (XHB-N17.46----%) has less than one-third of its money in home builders; building products companies make up nearly as much of the portfolio. Only half of the top 10 holdings are home builders.
And the PowerShares Dynamic Building & Construction Portfolio (PKB-N12.96----%) fund, often lumped in with home builder ETFs, owns just two home builder stocks, making up 10 per cent of the portfolio. Industrials make up more than 60 per cent of the fund.
This issue – there are plenty of non-home-builder stocks driving performance at these ETFs – has actually benefited the funds’ owners this year. In the fourth quarter, the iShares fund is up around 9 per cent, with the SPDR above 11 per cent and the PowerShares topping 14 per cent. The average home builder gain in the quarter is about 8 per cent.
The PowerShares fund was helped in the quarter by double-digit gains from Home Depot and Lowe’s, as well as a 30-per-cent gain from Fluor Corp., which is an industrial construction company with little involvement in residential building.
All of this means there’s no easy way for Canadians to buy in to the U.S. home building sector in anticipation of its recovery. Yet that raises a larger question: Is there even a rebound coming any time soon?
Economists Vernon Smith and Steven Gjerstad of California’s Chapman University are among those who believe U.S. housing is in for a long, hard slog. They point out the typical level of annualized new-home sales has been about 700,000 to 800,000 units, compared with the current rate of about 275,000 units. With two million houses either on bank balance sheets or predicted to be headed there, it would take five years to absorb the inventory under normal economic conditions. High unemployment and consumer debt may make the time frame eight to 10 years, instead.
That suggests an extended period where home builders have a rough time selling their products. And a period when investors in home building stocks wait, and wait, for their gains.
Source: The Globe and Mail's
http://www.theglobeandmail.com
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