Having What She's Having

Posted: Jul 24, 2012 12:01 AM

In the well-known movie ‘When Harry Met Sally,’ actress Meg Ryan tries to convince actor Billy Crystal that not all “verbal cues” women give men are honest ones. 

After Ryan makes her case, the classic line is given by an adjacent woman diner who is asked what she would like to order.  She nods at Ryan and says ‘I’ll have what she’s having.’ 

Today, I totally understand how the woman diner felt as I read the home-builders  sentiment for July.  According to the report, builder confidence is at its highest level since March 2007. 

Given that a reading of 50 is considered good (a level not seen since April 2006); the current score of 35 is not that high, yet still a long way from the low point of single digits. 

Historically, the Baby Boom Generation has been the largest group of both buyers and owners of houses.  Since thousands of Boomers are now retiring everyday, the movement of downsizing to single-dwelling homes is becoming commonplace.

Harry Dent (Age Wave Theory) always said to get in front of the Boomers in regards to money and you’ll be marching in the right direction. 

Unless something changes dramatically, the trend of moving away from home ownership by  the Baby Boomers will escalate, not diminish. 

Therefore, fewer buyers  from this age group does not bode well for the builders.  The next  most popular group of buyers has always been newly married college graduates.  Unfortunately, that group has graduated with no job prospects, massive education loan debt, and no real interest in owning something, that for their parents, has been nothing but a financial heartache. 

They’ll live in a house with mom and dad, but they  certainly aren’t going to buy one themselves. 

In addition, keep in mind that for centuries both legal and illegal aliens chose the U.S.  as the place they want to be. 

However, I’m sorry to say that the recent lack of jobs has put a halt to late night border crossings, and consequently, the amount of empty homes has been escalating as this  group is no longer a buyer either. 

National Association of Home Builders  Chief Economist David Crowe, always one for an attention-getting moment, justifies the builders’ exuberance by stating that he’s ‘seeing good progress in employment and progress in home prices.’  

Yes, the home-builders’ stocks have recently experienced a tremendous rally and the builders are ecstatic. 

But when the facts are presented the reality will hit ‘home’ that the future is not what it seems.  

Nevertheless, for now, I’ll have what they’re having.