Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Bond Market Bear Creating Gold Bull Market - 19th Jan 18
Gold Stocks GDX $25 Breakout on Earnings - 19th Jan 18
SPX is Higher But No Breakout - 19th Jan 18
Game Changer for Bitcoin - 19th Jan 18
Upside Risk for Gold in 2018 - 19th Jan 18
Money Minute - A 60-second snapshot of the UK Economy - 19th Jan 18
Discovery Sport Real MPG Fuel Economy Vs Land Rover 53.3 MPG Sales Pitch - 19th Jan 18
For Americans Buying Gold and Silver: Still a Big U.S. Pricing Advantage - 19th Jan 18
5 Maps And Charts That Predict Geopolitical Trends In 2018 - 19th Jan 18
North Korean Quagmire: Part 2. Bombing, Nuclear Threats, and Resolution - 19th Jan 18
Complete Guide On Forex Trading Market - 19th Jan 18
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

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

© 2005-2018 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

6 Critical Money Making Rules