Housing Market: Bottoming?

This guy, Keith Jurow, says a big loud NO!

Bill McBride is a very credible economic analyst whom I respect.  But he is dead wrong in predicting that the housing market is bottoming.  Here is why.

I will not discuss the first part of his claim – about housing starts – because I do not care about that at all.  Only economists and Bill think that this is important.

I will focus on prices in major metro housing markets.  That is what you really care about, isn’t it?…

Housing analysts have been confidently predicting a bottom for the housing market for the last three years and they have been totally wrong.  Anyone who acted on their advice and purchased a home has taken a beating.  The clamor about a bottom finally arriving this year is just as loud and will be just as wrong.Those of you who have an interest in your local housing market – either as a prospective buyer, seller, or just a homeowner worried about how low the value of your house might go – need to disregard this nonsense about a bottom arriving now.  There is no housing bottom in sight.

 

About Scot McKnight

Scot McKnight is a recognized authority on the New Testament, early Christianity, and the historical Jesus. McKnight, author of more than fifty books, is the Professor of New Testament at Northern Seminary in Lombard, IL.

  • http://bookwi.se Adam Shields

    I doubt the housing market has bottomed out since foreclosures have not ended. But on the positive side, in my area of Atlanta suburbs there are about 20 homes in a 2 mile radius that I have noticed being built. And they actually have been selling. About 1/3 of them seem to have either sold before they were built or have sold since they were built. There are at least four developments in my area that did not have a single house built in the previous 2 years. Now all have built at least 3 house on each one.

  • http://annsphillips.wordpress.com Ann Phillips

    I would like to see a chart of this type for several decades. Housing has gone through boom and bust cycles for as long as records have been kept. In this case, the boom was exaggerated, for many reasons, and therefore the bust was deeper. In any case, it looks to me as if the bottom on the right is leveling off. That would indicate being at or near the bottom. As the job market recovers, the housing market should follow, which is probably the basis of the prediction that we have bottomed out. Otherwise, as with the peaks, the troughs can only be pinpointed after the fact.

  • Larry Barber

    Most “housing analysts” have a vested interest in chatting up the market, they work for realtor associations, housing material manufacturers and so on. Anything they say should be taken with several thousand grains of salt.

  • Deets

    True Larry Barber, and I have no opinion about the bottom of the housing market other than to say that everyone other than “housing analysts” have a vest interest in chatting up continued doom. I mean what glory would the average blogger have in predicting that nothing drastic is going to happen, still typically, nothing drastic happens all the time.

    My guess is that housing markets will go up in some places, down in other, some people will make money and other will lose.

  • Brian

    Deets, I like your level of commitment in that last line :) Are you a professional weatherman?

  • Kenny Johnson

    The L.A. market still seems awfully high to me. In my city (Torrance), the median household income (wikipedia) is $76,312. The median house price is $548,900 (it was $719k in 2008). That’s over 7 times the median household income.

    So while you can find some houses for less (some parts of Torrance average closer to $430k and nearby cities have some cheaper homes ($320-350k), you’re still looking at 4 to 5 1/2 times the median income levels.

    We just can’t afford a mortgage here. We pay $1600 to rent a small house. To buy the same house would probably cost us about $2400/mo. Even $1600 stretches our finances more than I’d like.

  • Pace

    Some Real Estate markets are “on sale” and are a great opportunity for investors. We bought a foreclosure for 25K, did some major repairs, and now rent the house (market value@90K) for $850 a month.

    What bugs me no end is all the advertising to “BUY GOLD” on my local Christian radio station! Econ 101- Buy LOW, SELL high! Property (like gold) is a TANGIBLE asset, and is priced low right now in many markets.

  • Matt

    Scot, I live in Maricopa county & could agree but can see both sides of the argument. One reason for a positive outlook is Intel in Chandler where I live. This link shows their plans http://newsroom.intel.com/community/intel_newsroom/blog/2011/02/18/intel-to-invest-more-than-5-billion-to-build-new-factory-in-arizona

    This should give a MAJOR boost to housing since close to 30k new jobs will be created & a significant # of those will be moving here & buying a home.

    Besides wrong predictions in the last three years, what are you basing your prediction on?


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