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Just don't try to time the housing market for the absolute bottom. If you do, you will be too late, and with all the others doing the same thing at the same time, mortgage rates will rise. -Marc
The housing market is not as liquid as stocks, nor does it have the same low entry barrier as buying stocks, nor is it primarily an investment vehicle; it'll remain flat for some time once it reaches the bottom as historical graphs seem to show.
Rising mortgage rates will, by definition, only serve to drive down house prices further.
Besides -- "the absolute bottom" will look stay flat as a pancake for years to come in real value terms. There will be no need to "rush to get back in before you're priced out forever!" this time around. Those days are over.
No days are ever over. There will be another stock boom, another housing boom, another stock bust, another housing bust. Everything old is new again, and there is nothing new under the sun.
Those days are over in our lifetime. We won't see another housing bubble for the same reason we won't see another dot-com bubble.
(Not to mention a whole bunch of other reasons, like falling wages are everything is outsourced, declining populations among all but the poorest classes of society, and the refusal of foreigners to trade real goods for worthless paper dollars our government is intent on devaluing.)
Here's another sliver from Bloomberg released yesterday:
“There are just too many headwinds for homebuyers -- tight credit, mounting job losses and fears of further price declines,†said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The housing market is showing no sign of a bottom. This could be the story for the first half of this year.†Economists forecast a 3.5 percent drop in pending sales after an originally reported gain of 6.3 percent in December, according to the median forecast of 32 economists in a Bloomberg News survey. Estimates ranged from declines of 0.8 percent to 5 percent.
"Three of four regions dropped, led by a 13 percent slump in the Northeast and a 12 percent slide in the South. Pending sales increased 2.4 percent in the West. Compared with January 2008, pending sales decreased 6.4 percent. Sales of previously owned homes, which account for about 90 percent of the market, fell in January to the lowest level since 1997, according to the Realtors group. New-home purchases, which make up the rest, plunged to the lowest level since records began in 1963, Commerce Department figures showed. "
In the other parts of the nation where prices have dropped 25-40% sales are starting to stabilize, even increase a bit... But in the Northeast where prices have not dropped, and the economic crisis is starting to really hit home sales are dropping like a brick out of the sky.
Another snippet from the Fed Beige Book released earlier this week:
"The market for single-family homes in and around New York City has also weakened, though market conditions were reported to be more stable in upstate New York. Contacts in northern New Jersey report little or no discretionary activity in the resale market–almost all transactions are either foreclosed properties or distress sales by owners that need to move. In this environment, market prices are difficult to gauge, but an industry expert estimates that they are down 15 to 20 percent from the 2007 peak, with steeper declines at the high end. Separately, a real estate industry contact notes a rising number of “short sales,” for which the mortgage holder agrees to accept less than the full principal balance upon the sale."
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