House Prices Are Nowhere Near A Bottom Says Analyst

[Danke]

http://finance.yahoo.com/blogs/daily...125114464.html

[Zippyjuan]

Nobody knows when the bottom is hit until well after the bottom is passed but numbers have been showing most places have been going up lately.
The gentleman in the post says he is looking at total sales. Sales volumes are down because there are fewer houses on the market- they aren't being dumped for whatever they can get and the lower supply is also why prices have been rising. A further drop in prices of 50% over the next three years? I don't think so.

And the "shadow supply" he says will cause this drop is shrinking too.
http://www.usnews.com/news/blogs/hom...han-3-year-low

Nation's Shadow Inventory Falls to More Than 3-Year Low


By Meg Handley
October 9, 2012 RSS Feed Print

Long blamed for nagging weakness in the housing market, the nation's shadow inventory—distressed residential properties or those somewhere in the foreclosure process—is shrinking at a decent clip according to a new report, falling to a more than three-year low in July 2012.

About 2.3 million homes were delinquent, in foreclosure, or held by mortgage servicers in July 2012, a more than 10 percent drop from numbers reported a year ago, according to CoreLogic, a financial information firm. The July data are the most recent figures available.

[ctiger2]

Nobody knows when the bottom is hit until well after the bottom is passed but numbers have been showing most places have been going up lately.

[Zippyjuan]

And not too long after that cartoon was drawn the stock market started rising again (actually March 2009)- going back to over 13,000.

[Jordan]

The point at which you use the Dow as a proxy for the economy, housing, or even the stock market, whatever argument you're trying to make should be discarded entirely.

[Jordan]

Another analyst who ignores the point that a substantial amount of shadow inventory is localized into real estate hellholes. We can talk about shadow inventories in Detroit, southern California, Las Vegas, whatever, all we want, but that inventory has no real effect on prices elsewhere around the United States.

[jclay2]

Over the last 3 years, 90% of the new mortgages have been backed by the government in some shape or form. How this type of intervention is typical of a new housing surge is beyond me. My question for the housing bulls would be what happens when mortgage rates go to an unknown crazy high number like 6%?..... I know right, it could never happen. Just keep banking on the Federal Reserve to create something out of nothing.

[Zippyjuan]

Most people when buying a home look at how much a month it will cost them and use that to figure out what price of a home they can afford. If they want to buy and interst rates go up, they will not necessarily decide not to buy but will want to buy a slightly lower priced home. In 1980 mortgage rates actually hit nearly 20% and people still bought homes. Historically, six percent is still a low interest rate on a mortgage. Refinancing of loans would drop pretty significantly if rates went back up to six percent but sales would not necessarily plunge.

http://www.bankrate.com/finance/mort...est-rates.aspx

Prior to 2003, higher mortgage interest rates were the norm. In the early 1970s, rates hovered in the 7-percent range and spiked up above 9 percent in late 1975, late 1976 and most of 1978. At the end of the decade and throughout the 1980s, mortgage interest rates rarely dipped lower than 10 percent.

In the early 1980s, mortgage interest rates brushed the stratospheric highs of 18 percent and even 19 percent. Imagine trying to get a home loan with an interest rate of 18 percent. At that rate, the mortgage interest deduction would be a very lucrative income tax perk, but the monthly payment on a loan would be far more painful than a typical mortgage payment today.

During the 1990s, mortgage interest rates ranged from around 7 percent to roughly 9 percent for many years. It was only in 2000 that rates began to fall to earth. They held at less than 9 percent in 2000, less than 8 percent in 2001 and less than 7 percent in 2003.

[Brian4Liberty]

He mentions that he knows of no metro area that has hit bottom, yet he mentions Phoenix as a place that is nearest the bottom. The Phoenix area hit bottom a year and a half ago, and has been on the rise since then. Shadow inventory will remain a mystery, but on the ground, there are places where houses are being multi-bid up as much as 50% (i.e. 100k bids up to 150k). He mentions homes for 80k there, which means he doesn't know today's reality.

[ctiger2]

And not too long after that cartoon was drawn the stock market started rising again (actually March 2009)- going back to over 13,000.

If/when the DOW makes a new all time highs, then the DEAD CAT BOUNCE will be wrong. Until then...

The point at which you use the Dow as a proxy for the economy, housing, or even the stock market, whatever argument you're trying to make should be discarded entirely.

lol, my point was the DEAD CAT BOUNCE which this pic illustrates very well, and it's what the housing market is currently doing in some parts of the country. If housing across the nation reaches a new all time highs, I'll admit I was wrong.

The reality is, I don't really know anything, I'm just parroting what I've heard/read from sources who I think might be right. Everyone's just guessing at this point.