Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Are We Nearing a Housing Bear Market Bottom?

Housing-Market / US Housing Feb 15, 2009 - 08:41 AM GMT

By: Money_Morning

Housing-Market

Best Financial Markets Analysis ArticleMike Caggeso writes: It's been a long, downslide for homeowners or anyone trying to buy a house.

But a Moody's Economy.com report, “Housing in Crisis: When Will Metro Markets Recover?”, says we could be nearing the end.


Specifically, the study estimates that: 

  • House prices will stabilize by the end of this year.
  • The national Case-Shiller house price index will decline by another 11% from the fourth quarter of last year for a total peak-to-trough decline of 36%.
  • Before the downturn ends, house prices will have declined by double-digits in nearly 62% of the nation's 381 metro areas. House price declines will exceed 30% in about 10% of U.S. metro areas. 

The housing bubble was inflated by numerous forces ,” the report said. “The most important were the flawed process of mortgage securitization, a lack of regulatory oversight, and old-fashioned hubris. The bubble is now deflating with a vengeance.”

Overall house prices have fallen 25%, from their highs the report says, bringing average prices to where they were at the beginning of 2004.

“More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability,” the report said.

The report factors more aggressive action from U.S. lawmakers, and says that the housing market won't fully recover until the end of the year even with more government help. Housing starts, the number of new homes on which construction has started, will remain very depressed until 2011, the report said.

Echoes of a Housing Market Bottom

Moody's isn't the first to call the bottom. And its prediction is even conservative by some standards.

Arjuna Mahendran, Singapore-based head of investment strategy in Asia for HSBC Private Bank, expects the housing market to bottom in May or June .

Kiplinger's calls for a second-half bottom , but also a good amount of pain before getting there.

Karl Case, economics professor at Wellesley College and co-creator of the S&P Case/Shiller home price indexes, said the housing market should begin stabilizing in the next year .

Housing starts clocked in at 550,000 houses in December, the lowest in the 50 years the government has been measuring them. That pushes down inventories, Case said. And with home prices falling, demand should rebound as banks stabilize their capital and begin lending at low rates.  

“It's not going to be a terrible year for the housing market, believe it or not,” Case said on a Bloomberg Radio interview. “I think these stabilizing forces are there, and over the next year you'll see the housing market come back into equilibrium.”

Of course, there are dissenters.

Housing analyst Ivy Zelman said the market will continue reeling well into 2010 and won't bounce back until 2012 .

“There's still a tsunami of expected foreclosures, and that has to abate before there's a recovery,” she told CNNMoney.com . 

But the majority of heavy hitters are forecasting a bottom or turnaround in the next year.

What Makes a Turnaround

Standard & Poor's also believes that the market may reach the bottom in the next nine to 12 months. According to Kenneth Leon, CPA for S&P Equity Research, there are five forces that will eventually drive a market rebound:

  • Buyers' confidence in their jobs and income levels
  • Ease of housing price declines to market stability
  • Affordable housing in relation to household income
  • Access to mortgage financing with low interest rates
  • Ability to sell one's own home in order to move into a new one.

“We would first watch the existing housing market, which has high inventories and many potential sellers on the sidelines,” Leon wrote, adding that seven out of every eight home sales are tied to existing residences. “In market downturns, homebuilders are typically the first to lower prices, as unsold home inventories tie up companies' working capital and reduce their return on investment.”

And that explains last week's encouraging news: The index for pending home resales climbed 6.3% from November to December , signaling that demand could be on the rise, according to the National Association of Realtors.

Record foreclosures pulled down home values, making them more affordable to those able to get financing. 

And financing is the asterisk that makes each housing-bottom prediction slightly or enormously different.

Money Morning/The Money Map Report

©2009 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 investment 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 72 hours 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

© 2005-2019 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