The timeless wisdom of this Hall-of-Famer says a lot about today's housing market. Many people look to economists for answers in trying times like this. I find myself looking to that great sage Yogi Berra, the former manager of the New York Mets and Yankees, whose comments would seem to provide powerful insight into the current state of housing and the economy. For instance:
"If people don't want to come to the ballpark, how are you going to stop them?"
Yogi said this to Major League Baseball Commissioner Bud Selig when attendance was down around the league, but he might as well have been talking to President Bush recently about the need to bolster consumer spending. As we've been made well aware, consumer spending is the engine that drives the U.S. economy. Thankfully, consumer confidence is rising again.
"We were overwhelming underdogs."
Many experts expected housing to be a big loser in the current recession as it had been in past recessions. But that's not the way it is anymore. The housing capital spigot, no longer co-dependent on the SLs, doesn't just shut off the way it used to. Capital is flowing in from all over, especially the public markets.
"When you come to a fork in the road, take it."
Builders heeded that advice several years ago when they took a variety of different steps to insulate themselves from a potential downturn. They don't build as many spec houses as they used to. They option land whenever possible. They have systems in place to allocate capital to hot markets. They have computerized management controls that didn't exist 10 years ago.
"Slump? I ain't in no slump. ... I just ain't hitting."
This pretty much speaks to the situation in the housing market in the days following Sept. 11. Granted, traffic and sales slumped, but builders didn't think it was permanent. They were confident that they would recover because they knew market fundamentals were right. New-home sales and starts quickly rebounded to very high levels.
"I wish I had an answer to that because I'm tired of answering that question."
I don't know how many times in recent months I've been asked why the housing market remains so healthy compared to the overall economy. Even as the economy was supposedly in recession, housing starts jumped by 8.2 percent in November to a seasonally adjusted annual rate of 1.65 million, the highest level since July. Here's the answer: The demographics that drive housing demand are strong. Plus, given today's low mortgage interest rates, you can buy a lot of house for relatively little money today. That makes housing a great investment. And builders know it.
"It ain't over till it's over."
This might as well be Yogi talking about the recession, which may be over by the time this column appears. The National Bureau of Economic Research late last year announced that the economy had been in a recession since March 2001. Recessions historically last about 11 months. If history is any gauge, the recession should come to an end around February. Based on the November housing permit data--permits were up 5.3 percent in November--we could have a pretty robust housing market in 2002. Better get ready!
Editor in Chief