The CEO of Toll Brothers drew attention in his recent quarterly report for talking about pent-up demand. This is one of the silent forces that power recoveries. In a harsh downturn, it sometimes seems that buyers are completely gone, when in truth there’s a lot of household formation (see yesterday’s Cramer posting – he talks about household formation) due to a growing population. And household formation creates demand.
“Our third-quarter results for revenues, contracts and backlog reflect the continued weakness in most of our markets,” said Robert Toll, chief executive. “However, we believe there is growing pent-up demand from those who have postponed buying during the past three years. For example, when we run promotions and work the phones for a market, our rate of deposits improves significantly.”