Twice in the past two weeks I’ve been exposed to the writing of some smart guys who have made a coherent argument that the housing market is about to break out into an agressive growth cycle. There are still some well-publicized (and quite daunting) headwinds for the business. The toughest of these are the foreclosure inventory and the still tighter than average mortgage market. But what separated the analysis of both of these is their reliance on the most basic of housing market fundamentals: demographics.

The first was Warren Buffet’s annual letter to his shareholders at Berkshire Hathaway. If you’ve never read on of these you should. Buffett feels the undersupply of the past four years has created an un-bubble that will have to burst when the pent up demand from household formations pops. What makes Buffett’s point of view interesting is that he ties the housing industry to about 3 million jobs, or about 2 points of the unemployment rate. You can read the letter (along with his letters back to 1977) at http://www.berkshirehathaway.com/letters/letters.html

The second was a recent article by Charles Sizemore, one of these hot shot investment advisors who write for Marketwatch and the like. His analysis is that regardless of the related economic issues, the crush of home buying from the Echo Boomers is going to create a wave of demand that can’t be met by the current supply chain. You can read the article at http://www.marketwatch.com/story/heres-the-catalyst-for-a-housing-rebound-2012-03-07?link=mw_home_kiosk

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