Steven R. Smith

Will Housing Bottom in 2010 or 2012?

The Housing Bottom is not one but thousands of Bottoms. Within each local market, the trends vary in speed.

The faster the declines, the sooner the Bottom.

In Zip Codes that are going down 5% per Month, they will reach their Bottom sooner than those at -1% per Month.

How do you measure the Bottom in any given market is also important. The formula I use is based on Supportable Demand, which is a function of the interest rate on fixed rate loans.

Take the average house price minus the Supportable Demand price and subtract. The difference is then divided by the Change Rate. If it is -5% per Month, the Bottom might be reached this year.

What is true by virtue of how the Case/Shiller charts are done, is that this phenom will not start showing up until 2010. By then many markets will be well past their Bottom.