Homebuilder stocks started to plunge in 2005; subprime lenders in late 2006 and on into 2007; banks and housing financed collapsed in 2008; and, all along the way, the traditional media had been littered with segments related to a looming turnaround in housing.
Even today, analysts routinely appear on cable TV calling bottoms to all things related to housing ... yet we are currently trending through some of the weakest home sales and prices seen in a generation. “Hope springs eternal,” as they say.
But here we are at another spring, the seventh in fact since things soured for housing, and we are still looking at housing to show us that things have turned around. This must be some primal urge; like a pack of Bonobos waiting out a storm that has blown apart their tree nests, we keep peeking around the corner to see if the furor is over.
I suppose this is just another indication of how fundamental housing is to an economy. Without growth in housing, specifically increasing homeownership with stable and rising prices, an economy appears to be sluggish or even broken. A healthy expansion in housing represents increasing living standards and a thriving population, a trend that is tantamount to an expansion jobs or real incomes.
With housing continuing on the rocks, it’s hard to feel truly confident. But could this spring mark the turnaround like the pundits suggest? Could we be on the verge of a breakout in housing? Is housing exciting again?
While early indications from Radar Logic show that prices appear to have hit a seasonal low at the end of February -- and the spring surge of transactions will likely rise through the March-June reporting periods -- we are still far from anything that could even remotely be considered a healthy housing sector. Foreclosures are still mounting, 50% of all mortgages are underwater, there is an immense backlog of REOs and unsold new construction homes, and distress continues as an ever-present function, as supply and demand tips in favor of cautious, even indifferent buyers.
Make no mistake: The housing collapse was an epic disaster and will take many years to right. In the meantime, we will likely see scattered periods of strength and weakness as the market churns through and clears the destruction against a backdrop of the numerous other notable macroeconomic factors.