"Supply in the absence of demand is irrelevant."

(from Fortune, May 9th, courtesy of Builder Pulse)

“It is a grim scenario. And it appears today that no sector in the U.S. economy has suffered more from the liquidity trap than the housing market.

” . . . the cost of borrowing is far from the problem. Record-low mortgage rates have done little, if anything, to encourage home purchases or even refinances. And while homebuilders way overbuilt in the years leading up to the 2008 housing bust, the fact that mortgage rates have had little influence over home purchases underscores how weaknesses from the demand side (as opposed to the supply side) is perhaps the bigger problem.

“The housing market’s supply side is deeply troubled. With more foreclosures looming, it could take another five years to absorb the excess supply of homes. But the demand for housing deserves attention.”

You don’t say? As we have stated elsewhere on this weblog:  Supply in the absence of demand is irrelevant.