Housing Bottom … Warton Prof. Says Not Yet!
Wharton School Professor, Susan Watcher talks about the housing market. This is a very good take on our current real estate market. The 2009 real estate market bottom crowd should throw in the towel and start perfecting their 2010 market bottom sound bites.
It always amazes me how real estate industry spokespersons are constantly interviewed and quoted about the latest news. Isn’t it obvious that they always say a variation of the same thing? “It’s always a great time to buy real estate!” … “High interest rates, get in now, before they move higher.” … ” Falling home values, great values, no one can pick the bottom, bargains abound!” … ” This is Southern California, real estate values ALWAYS move higher!”
San Diego MLS listings
San Diego Real Estate … Will Low Interest Rates Help?
Will historically low interest rates be the key to turning around or putting a bottom in place for the San Diego housing bust?
Mortgage rates are near their lowest levels in nearly 40 years. Plus, the government wants to offer new borrowers a 4.5% mortgage rate as an incentive.
Ivy Zelman, chief executive of housing-research firm Zelman & Associates, estimates that nationally, even with such a low rate, only about 67% of U.S. households can afford a house. Homeownership was nearly 68% in the third quarter, according to the Census Bureau, implying there is virtually no untapped demand for homes.
Yale Professor … House Price Decline Could Be Worse than Great Depression
In a Yahoo Finance interview with Yale professor and MacroMarkets chief economist Robert Shiller he made some grim housing forecast while promoting his book The Subprime Solution. Three points Shiller made are:
- Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20%, it's not a stretch to think we might exceed that drop this time around.
- There are about 10 million homeowners whose debt is higher than their home value, which has broad implications for how Americans feel about their wealth and spending habits (read: more pressure on consumer spending).
- The current hopeful consensus — that house prices will bottom soon and then begin to recover — is most likely a dream. Housing markets don't usually have "V-shaped" recoveries. And even if house prices stabilize in nominal terms, after adjusting for inflation, most homeowners will continue to lose money.
- A few of our prior posts about professor Shiller:
San Diego Home Values Fall 16.7%
Standard & Poor’s Index Shows Home-Price Declines As The Largest on Record
50% Home Price Declines Possible?
National Home Price Index is @ It’s Lowest Point in Its Reported History
Housing Bubble … Investors Opinion
Yale economist Says San Diego Home Values Down 10% From One Year Ago!
Home Prices — Largest Drop in 16 Years!
Cramer Calls the Bottom in Real Estate Market
Jim Cramer is the host of CNBC's "Mad Money" and co-founder of TheStreet.com. Cramer has also been a contributor to New York magazine, and an occasional contributor to Time magazine. The outspoken stock market analyst said last week that the bottom in the housing decline will occur during the 3rd quarter of 2009.
Mr. Cramer reached his conclusion by combining a long list of signs that seem to show the market is stabilizing. These factors are an increase in sales volume brought on by falling prices, a slowdown in new home construction, combined with US government efforts to help troubled homeowners and new population growth that should spur household creation.
A few of our past popular posts concerning a housing bottom were:
Greenspan … Housing Bottom In Sight
San Diego Real Estate Market Bottom?
2% Increase In Existing Home Sales For May
Housing Slump Will Go Continue at least To 2009