Builders May Have Helped Spur The Mortgage Bust

I was at a seminar where they spoke about how Builders plan their developments and how many months of inventory they are comfortable with. One builder was fine with 9 months of inventory which I find shocking but makes complete sense in a free market system.

By having a surplus, they can actually hurt the small builders who don't have the financing to wait a year for a home to sell. People will pay a little more for new and with less small builders in reduces their competition.

In Portland, the last few years have seen a decline in small builders. Another reason was that their insurance for some had increased by 10 times.

With Builders getting into the mortgage business, they may have also may it easy to get the loans securing a sale that may not have happened otherwise. Once again this is just the swing of the pendulum from to lax then to strict.

The NW is still handling this well and we are showing the negative numbers that most everywhere else is dealing with. I hope it continues.