Housing market data has hinted that a bottom of sorts may have been reached in April and May. A closer look at the data reveals that the improvement was probably related to the very low mortgage rates of March and April. The bond market has taken an apparent turn for the worse in recent weeks; one that looks like it may be persistent.
Current real time real estate market data suggests that any improvement in the market in April was probably transitory, and that the market may still be a long way from even being able to support an extrapolation of where and when a bottom might occur, let alone declaring that a bottom has been reached. Furthermore, there are incipient signs of stress in metropolitan areas that had previously been somewhat insulated from the damage inflicted on the bubble areas. At the same time, former bubble markets are showing the worst price declines since the collapse began, with evidence that those declines are accelerating. This has resulted in only minor reductions in inventory in those markets. If mortgage rates rise, as appears likely, the situation is likely worsen before it improves, both in the former bubble areas and non-bubble areas.
Click here to download complete report in pdf format (Professional Edition Subscribers). Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.
An even closer look at the data shows that in many areas sales are dominated by REOs — e.g. in California more REO than ‘organic’ properties were sold, where ‘organic’ properties are those not in distress. Of course the REOs sold only due to huge discounts — banks etc are apparently now getting serious about dumping their growing inventory — which means an immediate ‘mark to market’ for every house in the neighborhood, which in turn means more negative equity, which means more trouble down the line etc etc.