Housing Bottom?

There was an article today from LinkedIn saying that the majority of economist think that housing has hit bottom.

Nearly two-thirds of economists and real estate experts recently polled say the U.S. housing market is at a historic turning point. More than half say they expect national home prices to reach bottom this year and remain stable with a modest 2 percent average annual growth through 2015, according to MacroMarkets LLC’s June Home Price Expectations Survey. MacroMarkets polled more than 100 housing experts, including Lawrence Yun, chief economist of the National Association of REALTORS®; Frank Nothaft, Freddie Mac’s chief economist; and others.

Most of the experts polled said they believe the bottom for housing prices occurred in the first quarter of 2011 or will arrive sometime before the end of the year. While predictions varied somewhat, on average, panelists predict a 3.52 percent decrease in home prices in the fourth-quarter of 2011 compared to the same period in 2010. They predict then small increases every year through the fourth-quarter of 2015, when prices are expected to rise 3.47 percent on an annual basis.

My contention is that real estate has always been and is still local. Even on a Macro-Level there is still a ton of “Shadow Inventory” or homes that banks hold that are non-performing assets, but they have yet to foreclose on them and take the “write-down.” Eventually these homes will come on the market which will either depress home values or at least have the minimum effect of keeping values from rising.

In places like Texas and especially the major markets like Houston, Austin, and much of the DFW area we have not seen the losses of value like in many parts of the rest of the country, thus unless things go really bad with the drivers of the Texas economy, oil, banking, medicine I don’t think we’ll see much if any further declines.

On the other hand, where there was just too much speculation and building i.e., Nevada, Florida, California, etc I think there will be further declines in these markets particularly when banks are either forced to or write-down bad loans on the books on their own.

With so much supply, a terrible economy due to Obamanomics, and tougher qualifying for loans I don’t see the escalation in prices as do the “economists” in this survey. In my opinion the housing market will be from flat to down for a long time in most areas of the country.

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