Thursday, May 21, 2009

Welch says housing starts must slow for price stability

If you're hoping that housing prices stabilize, you may be interested to hear the words of one of America's best-known business leaders, Jack Welch.

From Bloomberg's Tom Moroney:

Welch said he’s optimistic about an economic recovery and looking closely at the housing market for signs as to when it may begin.

“I want (new) housing starts to go down, down, down,” he said. “It’s the only way to get housing prices stabilized, and we need to stabilize housing prices.”

Housing starts slid 13 percent to an annual rate of 458,000, a lower level than forecast, Commerce Department figures showed today in Washington. The drop was led by a 46 percent tumble in multifamily starts, a category that tends to be more volatile. Housing starts fell 10.8 percent to an annual rate of 510,000 in March.

“While the market didn’t like it -- housing starts going down again -- I like it,” Welch said.

That's the problem with a bubble. It first needs to deflate before it can stabilize. After that happens, things can improve. It's no different from having to pay down credit card before going out and spending more.

I still have no idea why the Council gave a sweetheart deal an easement to a developer for $10 that will provide another 24 units to Cheshire's housing stock... and likely be a tax drain on the town.
On the flip side though, the total 41 units will offer some employment to construction workers who are in need of work.

Tim White

1 comment:

Anonymous said...

Welch is a has-been and most of his storied GE past is now unraveled. Has lost most of his credibility.