Here are a few statistics from their report.

S & P 500 Index – down 6.7% since end of 2008

Crude Oil – $35.40 per Barrel

Mortgage Rate Fixed 30 year – 4.9% though I’ve heard other reports of 4.8%. Recent cut was 11th in a row. You might remember that the Fed raised rates 17 times which put the market in the current tailspin.

Unemployment - increased to 7.2% and likely heading higher

Purchase Index (single family homes) down from 344- 295, a 35% drop from last year.

Sales volume down 8.6 %. last year.

Hanley Wood hosts and owns numerous trade shows including World Of Concrete and International Builders show in addition to others and numerous magazines. To view their research alerts click here Hanley Wood

First I found the just released Beige Book by The Federal Reserve. Don’t waste your time reading. It’s garbage. Whoever wrote it was likely a low level employee of the Fed who doesn’t have a clue. Pathetic that they would release such trash. All they said was that the markets were weak with nothing to substantiate their report. As if we all didn’t know that the markets were weak.

Better research is the stock price and earning of Home Depot and Lowes. Home depot is down from about $40.00 – $20.00 and Lowes is down from about $35.00 – $20.00. When the trading volume starts to increase and prices start to lift thats a good sign. Another interesting indicator is the price of lumber and copper. Copper is down from $4.00 to $1.00 per pound and lumber from $3.00 a linear foot to $1.70.

Interest rates are down significantly but as usual the Fed is about 12 months late. I mean come on, what were the geniuses at the Fed thinking when they raised the interest rate 17 times in a row. Woops.

Anyway in 1990 I was in the trenches selling, or trying to sell real estate in NYC. There were no buyers, but more importantly there were no sellers. Those who didn’t have to sell didn’t bother trying. Those who had to sell couldn’t. Why? Their properties were worth less than the mortgage. So the market went through a 2 year period while we all sat around waiting for the banks to foreclose. Then buyers started to buy. The first wave of buyers who made money were those who knew construction. They understood how to evaluate a property and how to add value cost effectively. They knew products, design and labor.

History will repeat itself again. First all the properties under water need to go through foreclosure. It would be cheaper and quicker for the Fed and the banks to just let the owners who are in troble off the hook but they won’t.

The markets will be faily slow and inactive for a few years. Those with money and expertise will be the first buyers. Once the foreclosed inventory is out of the way prices will slowly start to rise. Financing will come back into the market. Who will provide financing? It’s hard to say but some very smart finance entrepreneurs will figure it out.

Keep an eye on Home Depot and Lowes stock prices, check their earnings. Watch commodities like copper, lumber, steel. In the short term who will survive? Specialized, quality niche companies of all sizes. Some of the biggest beneficiaries will be small businesses.