To Put it Mildly...We Have Too Much Supply
This bubble crash update brought to you by Marketwatch...
"The slowdown in the housing market is being driven by growing inventories of homes from overbuilding and by speculators leaving the market, Toll Brothers Inc. Chief Executive Robert Toll said Thursday."
'"The housing market is experiencing an oversupply, to put it mildly," Toll said during the luxury-home builder's annual analyst conference."
'"The supply is coming from speculators who bought in 2004 and 2005 who are now sellers, and to make matters worse aren't buyers anymore," he added, noting that many homes built by more aggressive builders also are sitting unsold now."
"As a result, there is uncertainty about the market's direction, and potential buyers are remaining on the sidelines to see how things shake out."
Uncertaintly? Who's uncertain about where this train goes?
'"Since the early 1990s, there hasn't been one straight boom for housing, but instead high market volatility," commented Fred Cooper, Toll's senior vice president of finance. Housing starts have dropped several years during that period, and the Federal Reserve has been raising interest rates partly in response to housing-bubble jitters."
'"We recognize we're in a bumpy time right now in the market," Cooper added."
"So far this quarter, Toll Brothers has repurchased about 1.65 million shares through Wednesday. About a quarter of the firm's shares are held by insiders, executives said."
'"We've been using excess cash flow to repurchase stock, and will continue to opportunistically buy back more," said Joel Rassman, chief financial officer."