user Jef Nickerson

Lots of builders blame the banks for the turtle-like pace of this housing recovery. And it's true enough that tough lending standards have stunted the mortgage market. Last year mortgage originations totaled only $1.3 trillion, a far cry from the 2003 peak of $3.8 trillion. And it's awfully tough for all but the biggest builders to secure ADC loans.

But let's consider what might happen if banks flooded the market with money and allowed housing to get a jack rabbit start.

Well, most building product manufacturers couldn't comfortably meet demand for more than 1 million housing starts. So a surge would create shortages and big price spikes. The industry's distribution system has been decimated. So a surge would lead to delivery delays and even more mistakes than usual. Tradesmen have left the industry in droves. So a surge would create labor shortages, cost increases and too many cases of shoddy workmanship. Builders cut staff during the downturn. So a surge would mean compromised site supervision, lack of proper oversight of land acquisiton, sales and marketing snafus and management headaches.

Now, don't get me wrong. I don't think the banks are being tight-fisted because they want to save the industry from those kinds of problems. No, they're simply engaging in a classic case of closing the barn door after the cows got out.  (And never mind that they opened the barn doors in the first place.) But, as it is, the slow pace of this recovery is allowing housing to lick its wounds and position itself for a long period of moderate growth and stability.