i'm sure the scale is wrong here, but one thing i wonder about is the amount of over-investment we had in housing over the past couple of years. over-investment in fiber-optic cable in the dot com boom was great, after we got past the bust: communication and data transmission is really cheap now.
what if that happened in housing? cheap housing for a long period of time isn't a great thing. it's a disaster, because so many americans have their wealth wrapped up in their homes.
i doubt the inventory backlog is large enough to warrant the analogy i'm making, but demographic changes could make it worse. you can great a housing glut two ways. one is to build a lot of homes. (check.) the other is to move a lot of people (who tend to live in homes) out of the country. and one way to do that would be if somebody who was trying to prove that he really was a conservative agreed to round up 12mm illegal immigrants and told them that they can't live in america anymore. i wonder what would happen to home prices then....
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