England's King Edward III made archery practice compulsory in 1390 on Sundays and holidays. The wise king knew that preparedness for the unexpected was necessary for his country’s sovereignty. Some version of the following proverb was written in honor of the king’s wisdom in 1390:
For Want of a Nail
For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.
It’s hard to believe that the housing recovery is being slowed down because of the under availability of house building raw materials. It should be mentioned that new builds are needed to fill the vacuum in available housing inventory because there are fewer sellers than buyers to meet the housing recovery. The main reason for a shortage is a reluctance to list for sale the houses of pre-owned home owners who paid top dollar in the boom before the bubble burst around 2007. These home owners are still in limbo even with some price increases; prices are still up to 20% less today than when they bought before the bubble and these sellers are underwater or in negative equity.
What is hard to understand then is why a necessary increase in house building raw materials was not anticipated? Are builders merchants just cashing in or is the shortage genuine? Let’s consider what happens when there is shortages of other commodities, say coffee or sugar. The start of the shortage usually triggers panic buying by shoppers who stock up to cushion the effects of the shortage. Next thing is some entrepreneur will buy in a supply from a different part of the world and make millions overnight. So where are the buying entrepreneurs in the purchasing of housing construction materials?
Perhaps the USA has become so dependent on the Fed that all the entrepreneurs have gone into hibernation.
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