They say that bottoms for long-term cycles are virtually undetectable in real time because they are so long and so flat with most market participants having lost interest in the sector, as was the case for stocks back in the early 1980s. According to two big investment banks, the long awaited bottom for the U.S. housing market will come in the year ahead, thought it’s not clear if anyone will notice. First, from the Wall Street Journal comes this story about the Vampire Squid’s latest thinking on the property market.
Analysts at Goldman Sachs predict in a new report (published late Friday) that the end of the crash in home values is actually within view.
Goldman’s analysts, Hui Shan and Sven Jari Stehn, project that the national S&P/Case-Shiller home price index has 2.5% to fall before it hits bottom next summer. The Case-Shiller index of prices in 20 large cities is likely to fall 3.5% before hitting bottom in the second half of 2012, they say.
According to this Housing Wire report, a Barclays analyst thinks the non-distressed home market may have already hit bottom and that the rest of the market will soon follow.
Barclays Capital analyst Stephen Kim predicts a housing recovery buoyed by improving jobs numbers and the fact prices for nondistressed homes will have stabilized without government support.
“In the absence of a government homebuyer incentives, prices for non-distressed home sales have stabilized for almost a year,” Kim said. “This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street. This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices.”
Of course, freakishly low mortgage rates have had a lot to do with whatever stability non-distressed home sales have seen and, if home prices finally do stop falling next year, it’s hard to imagine they’ll go back up very quickly as lending rates will also be rising.