Builders Upbeat: Housing Market to Rebound

"Over the past 33 years, our nation has gone through seven housing cycles," said David Ruttenberg of Belgravia Group, a Chicago home building company. "As surely as night follows day, every boom period was followed by a downturn. Then, just as surely, the market rebounded."

"The main reason for today's housing downturn is more subtle. This time, the main problem comes from Wall Street. The root issue is "financial engineering". For many years, some lenders made loans to home buyers who were marginally qualified at best. These lenders made shaky loans because of excessive incentives they received from underwriters who bundled those loans, then sold them," Ruttenberg said.

By comparison, "In 1979, our sales were down about 80 percent over the previous year. It took us two years to recover fully," said Jim Hughes Jr., executive vice president of Wheaton-based developer Wiseman-Hughes Enterprises.

Even worse, "Back in 1979 and 1980, everything was 30-year fixed mortgages at 18 percent. You were lucky to get 15 percent," Hughes said.

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