Researcher Says Builder Demand at Root of Crisis

Subprime may have fanned the fire that brought the housing market to its knees, but it wasn't the root cause, a researcher who closely follows the new home sector in 81 metropolitan statistical areas told a gathering of real estate writers. Housing's downfall began in markets with strong growth restrictions, and stumbled from there, Michael Inselmann, president of Metrostudy, Houston, said at the NAREE conference in Austin, Tex. "It didn't start with subprime," Inselmann said. "Subprime added gasoline to the fire, but it was builders' running up against the inability to meet demand" in places like California, Las Vegas and Florida that started the worst nosedive in housing since the 1930s. Inselmann, whose company has its fingers on nearly 70% of the new home market, called artificial, government-invoked growth limits "the unindicted co-conspirator" of the downturn, and said that if governments want to slow growth in their communities, they should tell their local chambers of commerce not to create prosperity. The researcher also told reporters to beware of national housing statistics. "Real estate is a local market," he said. "Every single one is different. There is no such thing as a national market." National sales figures and prices are nothing more than "a roll-up" of local markets, he said, but they are only a statistical number. Metrostudy's database covers housing starts, absorption rates and house and lot inventories.