market trend supply & demand question

When Dean says peak, that means that a few years ago, the supply was chasing a false demand. The demand was high, because there was so much easy access to credit. Everyone had cash, and if they didn't, they could borrow money very easily! Now that there is a glut of houses, credit tightened, and cash is on the sidelines the prices peaked, and now they are on a downward trend because of the oversupply.

Hope this helps!!

in my opinion, chasing a peak market could also indicate that houses are so overpiced that few are selling, which sets up us for a sell-off.

Buy what ever you can get your hands on cheap.Hold what has good margins, and wholesale all the rest.

Jim Kendrick

You're assessment of supply and demand is correct. Have confidence in that basic knowledge regardless of who says otherwise. Also remember, people may use different terms depending on where they're from in the country as well. You are right on target. Keep up the good work.

Oversupply occurs at two points in the economic cycle; the first one is when no one is buying and there is a lot of supply on the market because everybody wants to sell. This is usually a precursor to the bottom. This can get pretty bad due to the fact that some people have to sell and it becomes a supply driven glut sometimes puncuated with a downward spiral. This puncuation has appeared twice; the Great Depression and the Great Recession (now). The other time the over supply occurs is at the top of the market when houses come on the market in their usual momentum but demand dries up. This causes more people to jump on the selling bandwagon because they don't want to be left behind or think they can beat the door from closing. That is what happened in the Great Recession as the demand literally fell off a cliff. Unfortunately, the falloff today was also magnified my the credit crisis as liquidity ceased to exist overnight (can you say Lehman Brothers)which caused investors to add inventory to a already stagnant market and brought on the tsunami of foreclosures.

The only way to solve this problem is to instill confidence in the American public. It is my opinion that this confidence will have to come from a jod stabization process whereby people feel secure in their jobs to enter into long term housing decsions again. Because of world influences, (such as $100+ oil) I believe organic growth cannot occur until 2014-2016, and that also depends on things like devaluation of Chiness currency, Euro zone soverign debt defaults, war in the Koreas, and perceived end of world scenarios (May 21, 2011 by some Christian groups; Dec. 21, 2012 by Mayan calendar)[ To see the impact of these type of events, simply look at the hiccup that was caused by 2YK fear focused on December 31, 1999 as people foretold of great calmities caused by computers not being able to deal with the year going to 2000 ]