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The Bigs Talk Housing / Calc Risk: "The Housing Bottom Is Here"

 February 08, 2012 05:37 PM


A: Bill over at Calculated Risk is a must read for anyone addicted to the financial/connected blogosphere. This comes about a week after Barry Ritholtz discussed his latest thoughts on housing. And now we got Manhattan appraisal giant Jonathan Miller's take on Bill's 'housing bottom' call yesterday. Lots of mixed views here so lets discuss some broader housing trends today and take a break from micro-analyzing Manhattan; a market that has been in a world of its own over the last three years. Lets go in time order here...first Ritholtz discussed housing with Blodget on Yahoo Finance's Daily Ticker as the "housing bottom" bandwagon starts to grow: Barry Ritholtz of The Big Picture:
"No evidence of a bottom, prices continue to fall, volumes are anemic..despite record low interest rates...the data is pretty explicit, year over year prices are lower and we are just about back to fair value if u look at things like median income or % of GDP, but if this is the bottom than this would be the first time that a major boom & bust hasn't careened past fair value into deeply oversold conditions..you don't just mean revert back to fair value."
Then we saw Bill from Calculated Risk make his call yesterday with the following important notes to consider. Bill McBride of CR:
There have been some recent articles arguing the "housing bottom is nowhere in sight". That isn't my view. First there are two bottoms for housing. The first is for new home sales, housing starts and residential investment. The second bottom is for prices. Sometimes these bottoms can happen years apart. For the economy and jobs, the bottom for housing starts and new home sales is more important than the bottom for prices. However individual homeowners and potential home buyers are naturally more interested in prices. So when we discuss a "bottom" for housing, we need to be clear on what we mean. For new home sales and housing starts, it appears the bottom is in, and I expect an increase in both starts and sales in 2012. And it now appears we can look for the bottom in prices. My guess is that nominal house prices, using the national repeat sales indexes and not seasonally adjusted, will bottom in March 2012. There are several reasons I think that house prices are close to a bottom. First prices are close to normal looking at the price-to-rent ratio and real prices . Second the large decline in listed inventory means less downward pressure on house prices, and third, I think that several policy initiatives will lessen the pressure from distressed sales. And this doesn't mean prices will increase significantly any time soon. Usually towards the end of a housing bust, nominal prices mostly move sideways for a few years, and real prices (adjusted for inflation) could even decline for another 2 or 3 years.

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