Flashback - 6/07 - Bush HUD Official "We may have already seen the worst."

[Median Democrat]

The Republicans are out in force saying no to Obama's proposals, but we should always remember how the Republican reacted at the inception of the crisis. By denying that it was taking place. Yup, perhaps we just need more happy talk from President Obama.

http://www.hud.gov/news/speeches/2007-06-25b.cfm

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Adjustments are underway. Treasury Secretary Paulson confirmed this last week. He believes that we are nearing the end of the slump. Fed Chief Bernanke said virtually the same thing two weeks ago, and reported that there have been "no major spillovers from housing onto other sectors of the economy."

Well, that is good news. But it could take up to two years to work-off excess inventories of homes and to complete the market correction. At the same time, it could be up to five years before we see the housing market return to where it would have been without the dramatic up/down cycle during this decade. Many economists believe that housing market cycles tend to be roughly 10 years in duration. A 5-year run-up, like we experienced from 2001 to 2005, is usually followed by a five-year period of correction and recovery. This market cycle just began its correction last year. We will know that the correction is over when we see a steady flow of new home sales above 1.1 million units per year, existing home sales stabilizing close to 6.5 million units per year, and house price appreciation of close to 4 percent per year. We also need to see the inventory of homes for sale drop from its current 7-plus months to something less than 5 months supply.

So it is likely we may have already seen the worst.

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