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[Getting Graphic] Building Until They Can’t Build Anymore

Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Source: NYT

Click here for full sized graphic. [1]

In Floyd Norris’ column this weekend titled Homes Sell. Homes Don’t Sell. Builders Still Build. [2] he notes that there is a disconnect between the demand for new homes and the number being built.

starts have been very high relative to the number of homes that builders are trying to sell, a fact that could indicate the weakness will last while builders seek to sell homes they have already built.

One of the things I have observed about builders is their powerful optomism. They have to be brash and fearless to be able to make things happen. That is part of their success formula. However, sometimes that can prevent them from seeing a downward change in demand. In addition, builders have their own internal infrastructure like staff, office space and aquired land.

New supply can often be like a conveyorbelt. It enters the market at a steady pace no matter what the current demand actually is.

They don’t always have the luxury of quickly adapting to a changing market or perhaps, their overhead prevents them from seeing the change until its too late after having gone 1 to 2 new developments too far.