brynaw

Truck Driver Wisdom Suggests Housing Stocks Are Bottoming

<i>but I think it's easy to see that housing is a lot closer to a bottom than a top</i>

Paul, the historical evidence and market fundamentals indicate you have it exactly backwards. See Robert's excellent analysis (above) and links to the Shiller price index &amp; Credit-Suisse ARM-reset charts. We're barely past the top on this bubble. Going by previous RE market corrections, we have at least several more years to go before prices are back in line with supporting incomes and comparable-house rents. If non-RE inflation runs relatively high in coming years, this might shorten the process a bit --but, this remains to be seen.

Truck Driver Wisdom Suggests Housing Stocks Are Bottoming

Umm, the housing market doesn't quite turn on a dime, Mike. It seems a tad early to join the ranks of serial bottom-callers (NAR, NAMB, etc.), especially when the last housing bust took a full 6-7 years to fully play out (1990-1997) and we're only in the first inning of this one. Consider the infamous Credit-Suisse chart, and I think you may get some idea of how long the current housing bear market may last: tinyurl.com/2h4x8t

Your "truck driver" story sounds apocryphal. Around my neck of the woods (SoCal) Joe Howmuchamonth is *still* convinced that house prices are about to reverse course and continue their "normal" 20%/year ascent to the sky. The housing bubble (and MBS/CDO) implosion stories are definitely gaining traction in the MSM, this much is true. However, most of the sheeple are still convinced that any correction will be shallow and short-lived. So, the contrarian play in housing was --and still is-- to focus on the fundamentals: overall direction of inventory, sales, core demand (minus speculators), borrower quality and access to cheap credit.

And what are those fundamentals telling us?