Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
Gold And Silver – Elite Supernova Death Dance In PMs? - 1st Nov 14
Pretium - Canadian Golden Elephant - 31st Oct 14
What USA Today Got Wrong About the Stock Market Fear Gauge - 31st Oct 14
Election Result - Labour Wins South Yorkshire Police and Crime Commissioner - 31st Oct 14
Gold Price Falls, Stocks Record Highs as Japan Goes ‘Weimar’ - 31st Oct 14
EUR/USD - Double Bottom Or New Lows? - 31st Oct 14
More Downside Ahead for Gold and Silver - 31st Oct 14
QE Is Dead, Now You Tell Me What You Know - 31st Oct 14
Welcome to the World of Volatility - 31st Oct 14
Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start - 31st Oct 14
US Mortgages, Risky Bisiness "Easy Money" - 30th Oct 14
Gold, Silver and Currency Wars - 30th Oct 14
How to Recognize a Stock Market “Bear Raid” on Wall Street - 30th Oct 14
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Free Forex Forecasts

Is This the U.S. Housing Market Bottom?

Housing-Market / US Housing Apr 25, 2012 - 10:13 AM GMT

By: Money_Morning

Housing-Market

Best Financial Markets Analysis ArticleDon Miller writes: Analysts, government officials and certainly homebuyers are spending hours trying to figure out if we have reached the housing market bottom.

Yesterday's (Tuesday's) data would seem to suggest the bottom is a bit bumpier than most people think.

According to the S&P/Case-Shiller home price index of 20 cities, home prices declined 3.5% from a year ago, while the 10-city composite slipped 3.6%. That meant fresh new post-bubble lows for home prices.


New-home sales in March also fell from their February level, the Commerce Department said. Together, they pointed to a more lackluster market.

"We're still in a slow period," said Robert Shiller, who co-founded the index that bears his name. "We're still in a funk."

But behind those numbers, there are reasons to be hopeful.

With borrowing costs near all-time lows, an economy that's bouncing back and cheap foreclosure properties attracting buyers, housing could be on the mend.

Knowing whether the housing market has bottomed out is important because nobody wants to pay thousands of dollars more for a property that could decline in value next week, next month or next year.

"The perception that prices could go lower...that's certainly keeping some people on the sidelines," Louis Cammarosano, general manager at HomeGain told Bankrate.com.

That's a problem because until buyers come back in significant numbers, the housing market can't completely regain its health. And without a housing market recovery, there won't be a real economic recovery.

But while we'd all like to know where the bottom is - pinpointing the exact date really doesn't matter.

Here's why...

The Real Housing Market Bottom
Instead of an exact date or even a range, the real market bottom will be a series of events that set up the real estate industry for recovery, according to Stan Humphries, chief economist at Zillow.com.

"The market bottom is a multi-step affair," Humphries said. First, home sales have to bottom out, which happened in early 2009.

Next, investors, second home buyers, and retirees with longer views will need to move into the market, because they're the ones that can hold out through near-term price declines.

And finally, sideline buyers will need to come in as rising prices and interest rates force them into the market.

So where are we now?

According to the National Association of Realtors (NAR),sales of existing homes in January were the most in the last 20 months. Also, housing starts in March were 10% higher than a year earlier, while building permits jumped 30%. Altogether, builders will start on 750,000 total new units this year -- up 23% from last year.

What's more, the total number of homes listed for sale has dropped - on a year-over-year basis - for 12 consecutive months. Inventory of homes for sale fell to 6.1months in March, down from 12.1months in 2010.

That's the lowest level since April 2006, the NAR says. For the market, dwindling supply is a positive.

Case-Shiller Math: It's More Expensive to Rent
Still, getting window-shoppers to take the leap has been a problem that continues to weigh on the housing market.

"It's an interesting phenomenon," Humphries said. "Despite unprecedented affordability and record-low mortgage rates, buyers remain on the sidelines."

But rising rents and home prices are pushing Americans to pull the trigger on purchasing a home.

"It certainly is a reasonable thing, if you want to own a home, to buy right now," said Shiller.

Today, it's more expensive to rent. As Deutsche Bank AG USA (NYSE: DB) recently reported, the average rent is now 14.9% more than the average home loan payment.

And although national prices continue to lag, many local markets are beginning to rise. That includes Phoenix, which was one of the metro areas hardest hit by the housing bubble and bust.

In fact, Humphries says somewhere in the neighborhood of 90% of ZIP codes are now seeing price increases.

Those factors are bringing back more "traditional elements" of the real estate market, Budge Huskey, president and CEO of Coldwell Banker Real Estate told U.S. News & World Report.

"We are now beginning to see a return of the move-up market and the second home market," he said. "The fact that those buyers are returning to the market is very much a positive."

Interest rates will be one of the keys.

Rising Interest Rates and the Housing Market Bottom
Mortgage rates did hit an all-time low of 3.87% in February, but with economic growth picking up steam, experts say there's really only one direction interest rates can go. That's up.

And for those who are waiting for the "bottom," the threat of losing a few thousand dollars to lower prices shouldn't be their biggest concern. Instead, buyers should be worried about the specter of rising interest rates.

For instance, a $200,000, 30-year mortgage at 3.9% would cost the buyer $139,599 in interest. Meanwhile, the same mortgage at 4.9% would cost $182,120 in interest.

So is it time to call a bottom in the housing market and jump in with both feet? Probably not.

But since it's still fairly early in the cyclical recovery, it's not too late for investors to start nibbling.

One way to benefit from the current state of the housing sector and to position for the eventual rebound is with home improvement stocks such as Home Depot (NYSE: HD) and Lowes (NYSE: LOW).

What's more, the spring season is money for both of them. It's comparable to Christmas for the retail sector.

Finally, take a look at the iShares Dow Jones US Home Construction (NYSE: ITB) ETF for a play on the resurgence of homebuilders.

These stocks should thrive whether we've technically reached the housing market bottom or not.

Source :http://moneymorning.com/2012/04/25/case-shiller-index-is-this-the-housing-market-bottom/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014