There have been several housing-related reports this week, some better than others, so analysts have been reading the entrails to determine whether the housing market is finally starting to hit bottom and turn around. The answers are mixed — some regions are doing better than others — but we still seem to have a ways to go before the national market stops falling and begins to pick up in any meaningful way.
Yves Smith had a helpful post yesterday summarizing many of the reasons to be skeptical of the more optimistic take from Bloomberg. From Yves:
Even though some distressed markets have seen an upsurge in speculative buying (my Florida locals expect much of current activity in that state to come to tears, given the massive number of foreclosures in the pipeline), the fundamentals are not at all rosy. Nick Timiraos of the Wall Street Journal pointed out, as others have, that the “inventories are tight” picture is misleading. Even though banks have put houses on the market, a lot of private sellers are holding back, still (after 5 years) hoping for a better market. And servicers slowed down new foreclosures and attenuated foreclosures while the mortgage settlement negotiations were on. They have sped up new foreclosures considerably, which will eventually show up in the liquidation of more homes . . .
Yves also provides a helpful presentation by Josh Rosner which is worth flipping through (about 13 pages). Yves notes:
One of the useful parts is on pages 6-9, where he debunks “new household formation means higher housing prices.” This series shows that the age groups with the largest numbers of households among them are in the 35 to 64 year old cohorts. Home ownership is already high in those age groups. And as we have discussed, home buying among the young is constrained by high levels of student debt. Rosner also suggests that financial pressures on new retirees (inadequate pensions and savings, rising health care costs) will lead them to try to sell their homes, either to downsize or to rent, when they would otherwise have remained in their homes.
There are several related stories there, the first showing the new home sales annual rate in March was still only about 328,000 — better than before but way below normal. The second explains/illustrates the “distressing gap” between sales of existing homes (better) and sales of new homes (still awful); that’s not normal, as the two usually track each other closely.
Then we get to the reports on the Case-Shiller and similar indices. These show that nationally, housing prices are still falling, albeit slowly. Overall they reached post-bubble lows in February, though prices increased in some of the regions/markets included in the index.
Finally, Calculated Risk gathers links/quotes from other analysts who believe we’re at or close to the bottom.
It’s worth walking through all of the accompanying graphs to the stories, which clearly show the huge housing price bubble, the huge collapse, and the still uneven attempts to level off. There doesn’t seem to be any unmitigated good news there, but we’re starting to see more optimistic views.