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     Floridabuilder appears to be leaning towards bullishness again this week-I do not doubt his technical analysis, or knowledge of the industry, but I believe there are larger economic forces in play than a homebuilder's cash position.   I commented on his blog that I thought this was the beginning of storm, though I did not support my opinion very well.   I believe what differentiates this downturn from previous cycles is that it is being driven by declining home values at historically high employment levels and low interest rates.   Foreclosures are increasing at what was once considered "the natural rate of unemployment."   As unemployment rises in a slowing economy I am anticipating a continued increase in the rate of foreclosures, and an additional decline in property valves between 10 & 25%, depending on the area,  across the country. Instead of 6-9 months of a corrective cycle, my gut says 24 months, with the dust settling spring of 2010.

Quote from Edward Leamer from article referenced above:

"Of course, what's different this time around is that the downturn isn't playing out just in Los Angeles but is hitting almost every major metro area. Yet perhaps the greatest contrast with past housing downturns is that this one has come while jobs are plentiful. No housing bust in memory has come without corresponding job losses. This time, "there's a disconnect," Leamer says. "No one I know thought that we'd have two years of a housing correction without an economic recession."

This is not to say that I will not have periods of -300 bleeding shorts with WCI, HOV, & NVR, but I believe they will be short term spikes, with the overall trend a downward spiral with multiple bankruptcies. 

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