Tuesday, February 7, 2012

CalculatedRISK: The Bottom in Home Prices is Years Away

The widely-read housing/econ blog points out that housing has two bottoms.  The good news is that the 50-year lows in residential investment, new starts and new construction seem to be behind us (see graph 1, from the FED, below).  The bad news for existing home owners who wish to sell is that the bottom for prices is years away.

This is true in the Charlottesville Area and for the rest of the US.  This blog sees the price bottom for C'ville at the earliest in 2015.

While it is true the Case-Shiller Home Price Index does not track this particular market, its numbers are relied upon by buyers everywhereIt moves the stock market and influences banks' housing strategies as well as government policy.  It is the primary metric whose numbers will be used to call the bottom in home prices. (See graph 2, below, from CalculatedRISK).

Click on images for larger versions.
Graph 1: Housing Starts



Graph 2: Two Bottoms

4 comments:

Anonymous said...

If you are going to quote McBride, why not do so with full transparency. He calls bottom for Real prices years from now, but Nominal prices this March.

Anonymous said...

Clicking through to the article you cite, I see that the author actually says that prices not adjusted for inflation--the prices "most people care about"--will bottom this March. Like, next month.

C'ville Bubble Blog said...

Going to confidently assert the opinion that prices here, and pretty much everywhere else, are not bottoming next month.

And here's another opinion:

http://tinyurl.com/6rrnsja

Anonymous said...

Dude, The highlighting on this blog is out of control. Please chill.