Are Things About to Turn Around for Housing?

I know it is fashionable to be bearish on housing, but are things about to pivot and turn? Put these two items together:

1) The Housing Affordability Index reached 141.1 in the most recent release. This was the highest in at least six years. As one blogger noted, this will move even higher next month due to a drop in fixed mortgage rates to the current 5.75%.

2) The U.S. Treasury is considering a plan to drive mortgage rates down to as low as 4.5%. They would accomplish this by purchasing mortgage-backed securities from Fannie Mae (FNM) and Freddie Mac (FRE).

Would low housing prices and a generational low in mortgage rates prove too tempting to home buyers and cause a mini boom in housing and begin to clear inventory?

Disclosure - I am long the XHB and ITB.

Comments

[Going Short...:]

When first time buyers can afford to get into a home, I don't think we are there yet.

Check out freetradingquiz.com

2008 Dec 04 01:32 PM

[Can'tSpotAB...:]

LOL you must work for the NAR ! ! ! A housing turn around is a LONG way off.

2008 Dec 04 05:29 PM

[Pipo:]

Read Toll Brothers CEO comments on his company prospects.

TOL is only down 2% in the last year. Quite impressive for a homebuilder.

ceotalk.blogpot.com/

2008 Dec 05 07:24 AM

[mangolfer:]

I'd vote yes, the turnaround is soon. There is alot of demand waiting on the sidelines, prices are low, mortgages are low... What else do you need.

2008 Dec 05 08:08 AM

[vreporter:]

Prices are NOT low in MOST of the country. That's the problem stupid!

2008 Dec 05 08:14 AM

[Tim Plaehn:]

By summer we will be looking back and seeing this as the bottom of the housing market. Sales of existing homes in California are double the rate of a year ago. The world knows Pres. Obama will do everything he can to stabilize the housing market. New home building is at post WWII lows, leading to a rapid tightening in supply once the buyers start to jump in.

If you have a website pumping housing bad news, your business is about to dry up and your readers will go where the positive things are happening.

2008 Dec 05 08:45 AM

[nobull:]

All I can say is "HA HA HA you delusional fools".
The economy is only just starting to hit its bottom. And housing will magically recover? Goodness!
Not till 2012 atleast.

2008 Dec 05 09:10 AM

[Eric Fox:]

When I said a turn I meant the stocks, not housing prices. Look at it this way - the Homebuilder stocks peaked in the summer of 2005. This was long before all the metrics that are used to track Housing turned bad. Therefore, it is logical to conclude that the same thing will occur at the bottom. Stock prices will bottom before metrics that are used to track housing turn up.

2008 Dec 05 10:19 AM

[MLKlein:]

The focus should be on volume not price. Volume fell much earlier than price and was down (way down) for about a year before price started downward. Although real estate remains a local market and national data can be misleading, in many hard hit markets volume is recovering (see Los Angeles). The worst may be over. Of course, all bets are off if our economy falls off the cliff.

2008 Dec 05 11:41 AM