Three Ways to Predict the End of the Housing Bounce (sales, real estate)

[86Sebring]

I thought this is a great article explaining the current economic situation, copied from yahoo financial:

<mod cut- post the link- you can't copy the whole article>

[elflord1973]

Originally Posted by 86Sebring

I thought this is a great article explaining the current economic situation, copied from yahoo financial:

this violates TOS ...

as stabilization and eventual recovery will happen on a localized, market-by-market basis.

Real estate agents just love the "all real estate is local" line.

But the truth of the matter is that these people, among other things, are really bad at math.

If you look at correlations between different regions that comprise the Case Shiller index, you will see very high correlation numbers (e.g. I ran a quick analysis in a spread sheet and got numbers over 0.99)

Given the relatively low correlations between the CS index and other assets classes, from equity to bonds to home building (correlation numbers all below 0.4 or so), the numbers actually support exactly the opposite -- that real estate is at least primarily global.

[MaverickDD]

It's all about the supply side! Real estate will not turn upward due to resurrected demand. It will only turn upward when Sellers can meaningfully say, "I won't take anything less." Presently, Sellers have practically no pricing power, which indicates to me that we still have a long way to go before seeing a real estate recovery.

My barometer: Real estate values will have hit bottom when the majority of real estate agents can honestly say that 85% or more of their Sellers won't lower their asking prices even after the house sits on the market for 90 days or more without receiving a single offer.

[86Sebring]

sorry about that, here is the link:
Three Ways to Predict the End of the Housing Bounce - Yahoo! Finance (http://finance.yahoo.com/news/Three-Ways-to-Predict-the-End-minyanville-1909575148.html?x=0&.v=7 - broken link)

[elflord1973]

Originally Posted by MaverickDD

It's all about the supply side! Real estate will not turn upward due to resurrected demand. It will only turn upward when Sellers can meaningfully say, "I won't take anything less." Presently, Sellers have practically no pricing power, which indicates to me that we still have a long way to go before seeing a real estate recovery.

My barometer: Real estate values will have hit bottom when the majority of real estate agents can honestly say that 85% or more of their Sellers won't lower their asking prices even after the house sits on the market for 90 days or more without receiving a single offer.

They might be able to say that now -- the sellers don't lower their prices, so the places don't sell.

A barometer that is easier to measure, is sales numbers. When sales numbers are normal (not when they've bottomed out, but when they've bottomed out and returned to normal levels), it will be a sign that prices have bottomed out.

[USER876]

What I have seen recently are sellers that won't lower, and we are running out of people that can afford their asking prices........so
holding a price won't matter if there are no buyers.

[*Capo*]

Originally Posted by USER876

What I have seen recently are sellers that won't lower, and we are running out of people that can afford their asking prices........so
holding a price won't matter if there are no buyers.

True. Since the whole housing boom was based on a pyramid-type scheme using credit, how can it operate at anything other than what the prices were prior to that? Especially with the fact that unemployment is still very high. Unless it is a married household where both people are working in the realm of doctors and lawyers, who can even afford to look at the prices for a decent house in NJ now?

[mboy]

Originally Posted by *Capo*

True. Since the whole housing boom was based on a pyramid-type scheme using credit, how can it operate at anything other than what the prices were prior to that? Especially with the fact that unemployment is still very high. Unless it is a married household where both people are working in the realm of doctors and lawyers, who can even afford to look at the prices for a decent house in NJ now?

Correct.

On top of the pyramid scheme, you had artificially inflated demand with rediculously easy credit.
Those days are over and demand has and will continue to decrease UNTIL prices become affordable to those who want to purchase a house.

Pretty silly to say housing bottomed out when sellers won't lower their prices.

Their will ALWAYS be people who can not floor their price and have to sell for whatever reason and will lower selling price.

Housing will turn around when the majority of people who don't have hosues and want to, can comfortably afford to buy them.

Not a day before that!!!