A comment on House Prices

Το αναδημοσιεύω - όχι ολόκληρο - καθώς θεωρώ απόλυτα αξιόπιστη τη κρίση του Calculated Risk
I re-post part of a Calculated Risk post as I highly trust their judge.

I've seen story after story today suggesting the bottom is in for house prices.This isn't like 2005 when it was almost certain that prices would fall, and fall sharply. Now we are much closer to the bottom than to the top in prices (for some metrics, see House Prices: Real Prices, Price-to-Rent, and Price-to-Income)

It seems there are many more foreclosures coming.
And the Fitch report yesterday suggests few of these delinquent homeowners will cure.
That seems to mean rising foreclosures, and more distressed inventory.

The MBA Chief Economist Jay Brinkmann thinks foreclosures will peak at the end of
2010.Historically prices bottom about the same time as foreclosure activity peaks. Maybe it will be different this time - maybe the modification programs will significantly reduce foreclosures - maybe prices will bottom before foreclosures peak ... but I'll go with the normal pattern.
Right now the months-of-supply in many of these areas is well into double figures, suggesting further price declines.

And on unemployment: most forecasts are for unemployment to rise into next year some time. Historically house prices do not bottom until after unemployment peaks. That seems especially likely now since so many homeowners are underwater. Once again I'll go with the normal pattern.

I could be wrong - this isn't as certain as in 2005 - but I don't think house prices have bottomed. If I'm proven wrong, I'll be the first to admit it.
Best to all.

http://www.calculatedriskblog.com/2009/08/comment-on-house-prices.html