Charlie Stromeyer Jr

Housing: No Bottom Yet in Sight

I agree that a bottom in housing is nowhere in sight, and here are 8 more reasons why home prices should continue to decline:

1) The futures on housing prices point to further downside.

2) The run-up in housing starts from 1991-2006 is much longer than any other recent run-ups in housing starts, and so the correction might also be longer.

3) Unlike the other recent housing busts, this current bust began in relatively good economic times.

4) According to Goldman Sachs, home price trends tend to lag an average of 9-12 months behind sales trends, (and 9-12 months is a very long time indeed during a massive credit crunch).

5) National home prices have not yet mean reverted to their long term trend line.

6) If the Federal Government ends up having to bail out Fannie Mae and Freddie Mac then mortgage rates could rise by about .5 percentage point.

7) The peak years for higher resets of adjustable rate mortgages (ARMs) will be 2010-11.

8) There is probably a great deal of "shadow inventory" waiting for the "right" time to sale.

Disclosure: still short U.S. home prices.