Clusterstock Can't Shake Bearish Housing Outlook

Funny. The people at Clusterstock didn’t bother to pick apart the Case-Shiller data when the headline number was going down. . . .

Even now, the damning chart from Mark Hanson that the site helpfully provides isn’t so damning once you look at it. Sure, part of the recent rise in non-distress sales may be seasonal, as Hanson’s chart shows.

But such sales are still running ahead of where they were a year ago. And the recent monthly rise in prices might be seasonal, too, but prices sure weren’t going up month-over-month this time last year. So around the edges, anyway, things seem to be getting better.

That’s bullish, not bearish. . .

P.S.: Hanson writes that

even with the [decline in home prices since 2005], a person who bought in 1999 for $450k -- who saw their [sic] house price rise to $1.5 million by 2007 and subsequently drop to $700k -- realizes a price gain and so does CS. . . . [But] the homeowner who bought at the peak in 2005 is sure feeling the negative-equity pain from the comparable sale at $700k. So much so, he is at an exponentially greater risk of loan default and foreclosure. [Emph. added]

By Hanson’s argument, so what? Let’s say a bunch of the people who bought at the peak do default. The subsequent bank dispositions will fall into the foreclosure sale bucket that Hanson says is non-seasonal and, therefore, artificially helps make the numbers look better than they otherwise would. His logic eludes me. . . .

P.P.S. If all Hanson is saying is that there are still a bunch of foreclosures yet to go, he’ll get no argument here. But that’s a lot different than calling the “Ultimate False Bottom.” . . .

P.P.P.S. Am slowly, reluctantly coming to the view that the moment Clusterstock announces the turn has finally arrived is the time to start worrying. . . .

Comments

[cadoggy:]

What is the purpose of [sic] as stated above:

"... who saw their [sic] house price..."

The spelling of 'their' is correct so why add [sic]? Sorry to nit-pick but it's hard to take authors seriously when they don't know basic grammar and falsely correct others'.

Aug 27 12:12 PM

[Jimmy K:]

Mark Hanson is a RE God; who has been on this for years... I think he makes a realistic, well thought out argument that CS numbers are flawed... anyone who bought in 2005 would agree...

Aug 28 07:22 AM

[HardwoodFlo...:]

Hard to follow any of the reasoning here...Kind of like any of the markets these days...

Aug 28 04:02 PM