Signs U.S. Housing Prices Are Bottoming Out

Could US housing prices finally be bottoming out? Standard & Poor’s Case-Shiller Index chart looks somewhat encouraging.

“The 10-City and 20-City Composites declined 18.0% and 18.1%, respectively, in April compared to the same month in 2008. These are improvements over their returns reported for March, down 18.7% for both indices. For the past three months, the 10-City and 20-City Composites have recorded an improvement in annual returns. Record annual declines were reported for both indices with their respective January data, -19.4% for the 10-City Composite and -19.0% for the 20-City Composite.”

The pace of decline in residential real estate slowed in April,” according to S&P’s David M. Blitzer. “In addition to the 10-City and 20-City Composites, 13 of the 20 metro areas also saw improvement in their annual return compared to that of March. Furthermore, every metro area, except for Charlotte, recorded an improvement in monthly returns over March.”

While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions.

“We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.”

Comments

[Realista:]

So, the First "break in flatline"......

... Means the Heart will start beating normally again? i do not think so!

.... Anyway, It is Too Soon to Tell.

Jun 30 05:04 PM

[Mad Hedge F...:]

In your dreams. There is so much inventory out there it is unbelievable, yet the relentless tide of foreclosures keeps dumping more properties on the market. The sickness has metastasized to commercial real estate, which may be the next big shoe to fall. Look at the chart of the Case-Shiller Real Estate Price Index, which shows us back at 2003 price levels. If this were a stock, would you want to buy it? It is starting to take on the flavor of an all out capitulation. Only the 1990-1997 bottom looks safe. Stay away. Rent, don’t buy.

Jun 30 05:18 PM

[Trend Surfer:]

Just because there's an uptick from a steep decline does not mean that there's a bottom. Any bottom takes multi-months to define, not from a simple on period uptick.

Jun 30 06:21 PM

[Cold Reality:]

Each month when the S&P/Case Shiller index data is released, one or more posts here declare that "housing price have reached a bottom". They have not reached a bottom, or anything near it, because there is an enormous inventory of unsold, unsellable, unlisted, or otherwise unaccounted for houses weighing on the market. In this should be included the "housing starts" that writers of this ilk tout as a "green shoot" but are nonetheless adding to the glut.

When the secondary- and tertiary-level At-A and Prime mortgage loan defaults begin to reveal themselves in larger numbers after Labor Day, we'll begin to get a feel for just how far from the bottom todays prices really are.

Jun 30 07:02 PM

[conceptwizard:]

dshort.com/charts/mort...

check this out and tell me if housing hit a botom.

Jun 30 07:56 PM

[Dave Wrixon:]

If the rate of fall has peaked, then we are only half way through, so they are still falling and will continue to fall.

Jul 01 01:22 AM

[Dave Wrixon:]

Actually, this is the least useful way of presenting this information. It would be better just to plot the mean price. This tends to make things look worse than they are and is almost certainly a throw back to when the Realtors were try to kid us things were better than they actually were.

Jul 01 01:27 AM

[Seth Chalnick:]

I'm a RE Broker in San Diego and can tell you from direct experience that prices have increased somewhat in the lowest end of the market, i.e. $325k and lower.

But here's the thing: 73% of all sales this year have been under $400k. And this 73% represents only about 25% of the defaulted loans that should be on the MLS but are not… due to a very artificial short supply of inventory, i.e foreclosure moratoriums, delayed NOD’s, insipid loan modification “incentives”, etc.

The mid to high-end market is virtually stalled. $700k+ homes represent only 8% of all sales.

Basically, what we have here is a low-end-specific, ultra-short-term statistic being taken grossly out of context… serving to promote a lame wishful thinking sentiment that "the market" has bottomed. The underlying statistic itself means nothing since the low-end free market has completely broken down. It’s a seller’s market alright… but only because ¾ of the inventory is being artificially held back.

The ironic thing is that it’s the only frickin’ market segment that makes sense to buy. It’s the only segment in which people actually qualify for financing. And more importantly, it’s the only segment in which people who can qualify… can actually afford the payments they’re qualifying for. It’s the only segment that’s taken to worst hit to depreciation. And the only segment that represents intrinsic value, ROI potential, and smart money validation. But I guess all the people who “bought” the homes with no money deserve to stay in “their” homes with no money, since “it’s a human right to own a home”.

Meantime, the people who have been working extra jobs without creating room for excuses need the modification help less than the folks who have demonstrated that they will default the first chance they get. You now how can tell? 60% have already re-defaulted.

The supbrime problem has not been fully digested, and yet I estimate the alt-a, option arm, etc. time bombs to be a problem about 3 times in magnitude... which has not come online yet. The big thing people are missing is this: A-paper prime 800 fico fully documented income loans that were written during the last five years... should also be placed in the same category as subprime. Its not a socio-demographic thing. It never was. It is a math thing.

Let’s see how many good credit risks hold onto their homes when they’re upside down by $200k. So far, 25% of all US mortgage holders are upside down. This number is just gaining traction.

The idea of a bottom is nothing short of preposterous.

Jul 01 01:58 AM

[Ted Hurlbut:]

I believe we're in a bottoming phase overall, but the housing market is likely to be a drag on any recovery. There's still too much inventory and unemployment is driving fresh foreeclosures. Housing may have led us into this, but it's not going to lead us out. And the anticipated problems in the commercial real estate market will only increase the headwind.

www.hurlbutassociates.com

Jul 01 01:04 PM