Energy, Food Prices Could Trump Demographics

Homebuilders point to strong demographics in predicting a return to normal production levels once the current downturn ends, but the executive director of Harvard University's Joint Center for Housing Studies says fundamentals alone may not be enough to float housing's boat. "Market conditions can swamp favorable demographic projections," Eric Belsky said at the National Association of Home Builders' Spring Construction Forecast Conference in Washington. Mr. Belsky pointed out that potential homebuyers "keep getting hit with other things" that may keep them on the sidelines for longer than most analysts are predicting. Rising energy costs, higher gasoline prices, and larger food bills are just a few of the things that are putting a big dent in the pockets of not just low-income families but also those with more substantial earnings, he said, and they are not offset by lower mortgage costs resulting from lower interest rates. "When in a pothole," Mr. Belsky said of would-be buyers, "it's hard to look at the road ahead of you." The NAHB can be found online at http://www.nahb.com.