Scott Sambucci

Housing Demand Is Back in San Jose

Mad Hedge - Thanks for the note. The editors drastically altered the headline title for this article. It's purpose was to show market activity by price zone, and how the lower end of the market is indeed clearing now that prices have fallen dramatically. Previously in 2005 and 2006, the housing demand was spurred by bubble activity - buyers wanted to get into the market as it was rising and could only afford lower-priced homes because of the prices levels then. Now, the market is beginning to show signs of picking up at the lowest price segment because homes are priced far more aggressively and because of foreclosure activity.

Housing Market: The 'End of the Beginning'

Hi Jasper - Per your note - "I am curious how the author squares this with the coming waves of ARm resets, especially in light of rising long bond. According to the Credit Suisse (done in 2007), there is a larger wave coming at the end of 2011 than the subprime one we already dealt with. That is pretty much inventory."

Absolutely agree with respect to some of the ARMs resetting - I've referenced this in a couple of articles, including:
seekingalpha.com/artic...

By no means am I suggesting that we're out of the woods - the premise for labeling our situation as the "end of the beginning" (and clearly NOT the "beginning of the end"...).

Housing Market: The 'End of the Beginning'

Radardoc - "While I must acknowledge that I am probably as pessimistic as you are optimistic, " ...

I guess I'm optimistic in the sense that I think that the bad data and information is behind us, though I don't think that we're anywhere close to the end of the housing market problems. It's important to look at how the housing market holds up (or not) through the rest of 2009 to see if this is indeed a bounce or early signs of recovery. The data on inventory levels and foreclosures indicates this is a bounce, which puts the start of the recovery (the "beginning of the end") in 2010 or 2011.

Housing Activity: Isolated to the Bottom Price Segment

Thanks for your comment. It's not that what's being written is all that unique - the housing market is down - not a surprise. I'll never fool myself into thinking that I'm laying the groundwork for a Nobel Prize. My goal in postings like these is to give some unique visibility to local data and real numbers at the individual market level, and to assemble information for those that might be unaware of the acute problems of the housing market. Hope you'll keep reading!


On Mar 31 01:06 PM User 386374 wrote:

> I need a new line... I have wrote this exact same statement in at
> least 150+ different blogs. I don't like reading the truth 150+ times
> because I bought a house for more then I could afford because I believed
> everything I was told..that houses never drop in value. Please stop
> writing the truth...or I'll keep complaining...even if I have to
> lie.

Can We Expect a Springtime Bounce in Housing Prices?

Hi Tom - The scales are chosen automatically by our charting tools here at Altos Research. These graphs are not intended to be used as a strict supply and demand curve - simply to show relationships between these two key housing market stats. That is, you can ignore the point of intersection between the two curves.


On Feb 10 10:06 AM Tom Armistead wrote:

> Interesting article.
>
> I would be interested in knowing how you selected the intervals to
> scale price on the left vs.inventory on the right.

Housing: Not Cheap Enough?

Judy - Nice work on this synopsis of where we are. I attended Karl Case's presentation at the American Economic Association meeting last week - was a very revealing presentation of the data. Here's a link to the complete paper that he presented, with the presentation slides he used in the appendix of the paper:

www.aeaweb.org/annual_...

The Housing Market Will Improve with Lower Prices, not Lower Interest Rates

Hi John - Thank you for thoughtful feedback - always appreciated!


On Dec 26 11:22 AM John Lounsbury wrote:

> PS
>
> Scott - - -
>
> I have read both of your articles, and was not excited about the
> first one. This one is much better and adds to my insight into the
> housing market outlook. I particularly like the graph comparing
> price and inventory. In my opinion, an impaired demand facing an
> inventory overhang is the real problem for the next several years
> in residential housing. Interest rates are secondary.

The Housing Market Will Improve with Lower Prices, not Lower Interest Rates

It's important to mention that this article is an extension of an article published yesterday comparing the differences in monthly payments to the buyer with lower interest rates vs. lower home prices:

seekingalpha.com/artic...

California Housing Recovery? Not So Fast

I would agree Tim's comment that there are differences between the new and existing home markets. I only specialize in the existing home markets, but there are some interesting price trends that we're seeing. For example, check out this chart of existing home prices in Sacramento by 25% divisions - top, two middle, and bottom market segments:
tinyurl.com/7l3vbn

There is definitely a rate of decline in home prices at the lower ends of the market. The question is - are these reflective of a turnaround, or just that prices have fallen so far that there is an asymptotic effect at some perceived price floors? Either way, prices are starting to show signs of leveling in Sacramento. If California was first in the glut, it could be first out and maybe this is the beginning of the beginning....

Housing Solution: Crashing Home Prices or Cheaper Mortgages?

Working in the real estate industry, I'm hearing lots of chatter among mortgage brokers and real estate agents thinking that cheaper money is going to spur demand and jumpstart the housing market. Seasonality is a problem right, but in the longer term, I side with a continued price decline as the mechanism that will begin clearing the market. I came across an interesting paper by John Taylor from Stanford that was rather critical of the use of interest rates to stimulate demand. More info on this here:

scottsambucci.blogspot...

Housing Solution: Crashing Home Prices or Cheaper Mortgages?

Working in the real estate industry, I'm hearing lots of chatter among mortgage brokers and real estate agents thinking that cheaper money is going to spur demand and jumpstart the housing market. Seasonality is a problem right, but in the longer term, I side with a continued price decline as the mechanism that will begin clearing the market. I came across an interesting paper by John Taylor from Stanford that was rather critical of the use of interest rates to stimulate demand. More info on this here:

scottsambucci.blogspot...