driftwood2

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

Housing prices are still above historical norms relative to income. They are also still high relative to rent. We still have a ways to go for housing prices to find a bottom. However, I think prices in the inner cities and outer developments may have already hit bottom. The inner cities is where the worst of subprime is and it was the first to go. The outer developments are the least in demand and the most speculative so it was the next to go. The burbs are still only minimally affected. I expect that they will experience a slow but unrelenting decline over the next 2 years as alt-a and option arms reset. Commercial real estate will probably crack this year.