The Double-Dip (Probably) Stops Dipping in March (Feb. Roundup)

Every month, Redfin publishes two newsletters on real estate prices. One, usually published on the last Tuesday of every month, is a Redfin Roundup, which synthesizes data collected by economists, government agencies and others to provide a complete portrait of what happened in the market over the past month. The other is Redfin Insider, usually published by the 12th of each month, which analyzes our own databases to identify the major trends in listing inventory and prices as well as sales activity and consumer traffic. To receive these newsletters by email, just sign up! Here’s the February Roundup:

Big News Redfinnians!

All the big monthly real estate numbers came out over the past 24 hours. December prices fell. January sales volume rose. The number of people borrowing money for March and April purchases increased. The number of properties going into foreclosure is falling.

Our own business went crazy January 1 — mid-February, then things calmed down a bit last week. Buyers have come back from the holidays with more urgency than we’ve seen since last April’s tax credit, but often complain there’s nothing good to buy. Lots of bidding wars in California and DC, fewer elsewhere.

Putting all that together, we think the market’s strengthening. We expect January and February prices to fall, then increases in March and April. We’re not making any long-term predictions because interest rates have finally started rising, with some economists expecting 2011 rates to increase from 5% to 6%.

Prices Drop 2.4% in 2010

OK, let’s dive into the data! The Case-Shiller index for December home prices showed broad declines across most of the U.S., with prices sinking to levels last seen almost eight years ago, in June 2003:

Area MoM Change YoY Change Date of Max Change from Max Prices Last at This
Level in…
# of Months
of Decrease
Phoenix Real Estate -1.7% -8.3% Jun-06 -54.7% May-00 7
Los Angeles Real Estate -1.3% -0.2% Sep-06 -37.6% Oct-03 5
San Diego Real Estate -0.7% 1.7% Nov-05 -36.5% Mar-03 1
San Francisco Real Estate -1.0% -0.4% May-06 -37.8% Apr-02 5
Denver Real Estate -0.7% -2.4% Aug-06 -11.5% May-02 6
Washington DC Real Estate 0.3% 4.1% May-06 -25.8% May-04 0
Atlanta Real Estate -0.9% -8.0% Jul-07 -26.8% Dec-99 5
Chicago Real Estate -1.4% -7.4% Sep-06 -30.1% Mar-02 4
Boston Real Estate -0.1% -0.8% Sep-05 -16.4% May-03 5
Las Vegas Real Estate -1.1% -4.7% Aug-06 -57.6% Oct-99 3
New York City Real Estate -0.9% -2.3% Jun-06 -22.2% Mar-04 4
Portland Real Estate -1.2% -7.8% Jul-07 -25.9% Feb-05 6
Dallas Real Estate -0.2% -3.6% Jun-07 -9.4% May-03 6
Seattle Real Estate -2.0% -6.0% Jul-07 -27.9% Dec-04 5
20 City Index -1.0% -2.4% Jul-06 -31.0% Jun-03 5

A Rocky Bottom or Another 25% to Fall?

The two economists behind the Case-Shiller index differed in their outlook for what’s ahead, with Karl Case arguing the market was at a “rocky bottom with a down trend,” while Robert Shiller saw “a substantial risk” of 15% – 25% declines.

In the West, only San Diego saw year-over-year price increases:
Case Shiller Price Index

In the East, only Washington DC saw year-over-year and month-over-month price increases:

Case Shiller Price Index

Why Has Redfin Been So Bullish?

We’re one of the only ones who are more optimistic. We recently wrote in the Wall Street Journal that housing numbers through February would be “woeful,” but that we expected the double-dip to stop dipping in March.

Do we still feel that way? Mostly. Demand was stronger two weeks ago when we wrote that article, but it’s still pretty strong now. New Redfin customers increased only a modest 6% from one four-week period to the next. Over that same span Redfin customers signing offers has increased an eye-popping 54%.

Nationwide, existing-home sales in January increased 5.3% compared to January last year. Over the past four weeks, mortgage applications for home purchases increased 1.6% — and that’s after adjusting for the seasonal rise in activity we expect this time of year.

While demand is rising, the supply of distressed homes is falling. Mortgage delinquency rates fell 11% in the last three months of 2010, mostly because banks have become more aggressive about modifying loans or approving short sales to avoid a foreclosure. Year over year, foreclosure filings have decreased 17%.

The question is, will the market recover before interest rates rise? Rates hit 5.05% last week before sinking down to 5%:
Real Estate Bank Rates

The Wall Street Journal reports that rates may reach 6% by year-end. Oh and did we mention all the other bad stuff that could happen? Mideast turmoil, the possibility of a government shutdown, a six-month jail term for Lindsay Lohan? Pandemonium.

But we think everything’s going to be ok, and that it will actually get better, at least for a little while, if not for a long while. What’s your take? Leave a comment below and let us know! And thanks as always for your support!

Best, Glenn

Discussion

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  • RealityInRealty

    If 2008-09 was a housing dip, do not worry about a double-dip. And sorry Redfin, it’s not because housing is on the mend. It’s because the Mariana Trench is over the horizon. The housing double-dip stops dipping in March because it begins to plunge.

    Social mood has skyrocketed over the past eight months. Just look at it’s barometer, the stock market. Last Friday the party likely ended with highs we probably won’t see again in ten years. The economy is on life support two years after a recession, the Fed has zero tricks left, (read Notsofast’s list for more) and yet people are giddy. Does this not worry the masses? Bear market rallies are sucker plays. Put this bear market rally on the scale of nearly two years and you have the makings of a catastrophe when it evaporates. Watch what happens over the next few weeks and months as the stock market drop accelerates and suddenly the Middle East, US debt, state bankruptcies, and the nuclear time bomb that is Europe come roaring back into the news.

    When social mood and the markets plunge through the lows of March 2009 on their way far far lower, houses will be right alongside. I hate to say it, but buying a house now is about the worst “investment” you could make, right up there with junk bonds, dot-com stocks, and tulips. 2008-2009, not to mention 1931-1932, will be considered boomtimes when we look back five years hence. But consider the good news: in 2016 you can buy that oceanfront mansion for the price of a decked-out doublewide today…if you haven’t speculated in the meantime.

  • Lori Bakken

    Not sure what to make of it all….but in my market Renton to Auburn (South King County) in my presently snowed in state of Washington it is crazy busy! Feeling the perfect storm of decent inventory, good value for your $$, and some strong school reviews-people are moving to the suburbs……

    • Notsofast

      Here in Woodinville, Wa. we also have a perfect storm of declining incomes, massive shadow inventory and and a boat load of McMansions lived in by delusional empty nesters… funny what 20 miles will do for you. This must be what is meant by the convergence zone! Btw, the snow capped Douglas Firs/Cedars are a sight to behold…

      • http://blog.redfin.com GlennKelman

        The outlying areas are still in a world of hurt… I love the last line Notsofast.

  • Romulousmike

    Clearly, you will be proved wrong once again. Isn't it kinda every month real estate people tell you we are rebounding.. Interest rates on the rise, even harder to get a loan, higher down payments and the banks sitting on an unprecedented amount of distressed inventory.. I look forward to the March figures – with my hands firmly in my pockets.
    Whilst the NAR…
    “The NAR has been accused of overstating the rate of home sales by as much as 20 percent.
    While acknowledging the trade group might have overcounted sales, NAR chief economist Lawrence Yun told reporters”

    • http://blog.redfin.com GlennKelman

      We are not members of the National Association of Realtors, and we disagree with most of their positions. We are not often bullish on the market.

      In our hometown of Seattle, we said last year the market would drop 2%-4% in a single month, and 10% over the next year:
      http://blog.redfin.com/seattle

      When June 2010 sales were still frothy from a federal tax credit, we said on national TV that the market would become like a fat man who can’t get up.
      http://www.cnbc.com/id/3787439

      We have been quoted in the New York Times and the Wall Street Journal over the past two years saying the market would fall.

      The only time we have said the market would improve was in LA, at the end of 2009:
      http://articles.latimes.com/20
      This is exactly what happened.

      Maybe we'll be wrong this time, but we're not being duplicitous. The numbers in our own business have been very weak, but recently they've been very strong.

      The Case-Shiller numbers for March come out on May 31. I'll be sure to drop you a line on that day, regardless of the outcome…

      • Romulousmike

        I'd appreciate that Glenn thanks. Just in case I miss it.
        Truth be told you have a shrinking market of eligible buyers (no credit, no savings, no job, no willing bank to lend, Fannie and Freddie on the outer, rising costs and salaries that don't rise to match). Where are your buyers? China?

        “As we begin 2011, the housing recovering remains vulnerable to high levels of unemployment, delinquencies and foreclosures,” Chief Executive (Freddie Mac) Charles Haldeman said in a statement. “We expect national home prices to decline this year as housing will continue to take some time to recover.”

        By your estimates thats only a couple of months away… (why all the doom and gloom)

      • Miravengian

        I sold my house in Orange, CA in 2006, and have been watching/waiting on a daily basis to buy a 4 bedroom + house in specific neighborhoods around that area since then. Over the last year, I have occasionally seen places I like, gotten pre-approved, and placed unsuccessful bids. While I would like to buy a house and be done with this process before interest rates get too high, I firmly believe prices will continue to fall as rates go up, it becomes harder to get a loan, and external forces stop artificially supporting prices. I think many others share this view, but most want-to-be buyers are heavily influenced by fear/emotions. This group relies primarily on what others tell them about the housing market and have little insight into what actually affects prices and how slowly the market changes. It appears this group believes the housing market reacts quickly to external factors like the stock market, but it does not. For a number of reasons, the housing market takes months/years to make turns (like a cargo ship) while the stock market adjusts to global forces quickly like a speed boat.

        This leads me to my point: today's short-term trends are not an accurate reflection of the long-term path of the housing market. Seven months ago I submitted all my documents and obtained pre-approval from my broker so I could make an offer on a house. About three weeks ago I asked my broker to use the exact same numbers to calculate my buying power today. It went down $65k because of the changes in interest rates and available loan products! Based on my daily observations, this decrease in buying power has not been incorporated into the market value of similarly priced homes yet. This tells me today is not the best time to buy. Traditionally (stated income loans aside), the maximum home buying price for most people is determined by the maximum monthly cost to own. Therefore, it is hard to believe housing prices will start going up before the above reality is absorbed into the buying price of homes. I think the short term trend is just a reflection of sellers wanting to ignore this change and uninformed buyers reacting to the fear of higher interest rates without waiting for the related benefits. It is far more likely home prices will decrease in the near future to account for these “recent” changes as the market completes its slow turn toward this latest correction.

  • 1stMillionAt33

    This is just my personal opinion which I have been saying since 2007 housing market peak:
    I am fairly certain that US housing prices will not recover its inflation-adjusted price until 2027 at the earliest. In terms of nominal prices, I am less certain but I also tend to think that housing prices will not recover its nominal prices until the same time-frame. My reasoning is fairly simply. Every financial bubble in human history will NOT repeat itself for at least 20 years. Usually it’s AFTER 20 years have passed that the same asset class can have a new chance to begin to rise in prices.

    The two main negatives that have not been priced in by the current buyers are
    1. Bond bubble bursting causing rise in interest/mortgage rates, AND shortening of the duration of the mortgage term. This will cause the domestic US buyers to decrease their offering prices.
    2. Increasing deficits will most likely result in increase in property taxes. This will increase the holding cost of houses and therefore decrease the home ownership benefits.

    The third negative that has not been priced in by the foreign cash buyers is that the current US housing price can possibly become 50%-off, once US dollar drop another 50% against the stronger Asian(Japan-excluded)/commodity currencies. These buyers will probably not flock into US after 50% off because the relative political/economical stability across regions can change in detriment to US, and that these “savvy” businessman and “corrupted” government officials won’t probably be throwing good money after bad.

    Frugal at 1stMillionAt33 (dot com)

  • Renting in Mass

    “We’re one of the only ones who are more optimistic.”

    Don't worry. You're in good company. The National Association of Realtors and the various state Associations of Realtors agree that it's a good time to buy (or sell) a house. It's just the economists and the impartial observers who are pessimistic.

    • Alexworden

      How can it possibly be a good time to buy and sell at the same time. Sorry if you're actually being witty since the only group that would say that are the blood sucking realtors.

      • http://blog.redfin.com GlennKelman

        Obviously, we've never made that claim.

      • Makerly

        Umm, in a stable market with flat pricing expectations? Is that obvious or is it just me? The only person that would ask that is probably the ignorant casual observer that never took Econ. 101 but who loves share their “opinion.” This isn't even a comment on the prognostications, just on Renting in Mass's comment.

      • Leigh_neale

        So true! Realtors have an incentive to keep people optomistic and keep prices up. How many people are secure enough in their job to actually run out and buy a house?

    • http://blog.redfin.com GlennKelman

      If the Devil himself said he thought March and April prices would stabilize, and that sales volume would increase, I would have to agree, because that is what we're seeing in our own business. It doesn't make us the Devil.

      • Yms

        Or does it?

    • Leigh_neale

      In other words… people who study the market as opposed to making a living on it?

  • Renting in Mass

    And Case's predicting abilities are also at a rocky bottom with a down trend. Has he ever not said we were at the bottom? I know for sure I heard him announce the bottom 10% ago.

    • http://blog.redfin.com GlennKelman

      I think you're thinking of this article, written in September 2010 by Karl Case, because he argued that the market would at some point recover some of its value:
      http://www.nytimes.com/2010/09
      He also said that “none [of the current data] bode well for a quick recovery.” Since he wrote that article in September, the market lost 3% of its value.

  • notsofast

    Let's see… Incomes to prices paid still way out of wack, more stringent lending standards, larger downpayment requirements, government budgets in disarray, austerity measures advocated, geo-political events, shadow inventory, closet inventory and increase prices for food and energy. Sounds to me like you're pimping your product to young buyers.

    • http://blog.redfin.com GlennKelman

      You are right that (much-needed) more stringent lending standards and (much-needed) financial austerity measures threaten the housing market. We worry about that, and rising interest rates.

      But you're mostly just wrong about income-to-price ratios: the average mortgage payment on a $300,000 house bought four years ago was $1,533. That same house would currently cost $833 per month, based on falling prices and lower interest rates (data from September, when interest rates were lower but prices were slightly higher). The problem isn't home affordability so much as unemployment, consumer confidence and until recently, over-supply.

      By the way, we have less than 1% market-share nationwide, so our main goal is to gain share, not increase the number of buyers or sellers in the market. We gain share by being different and by winning people's trust, and we win people's trust by being right. Mostly we have called a bear market for the past two years, which hasn't been hard to do. Now the data we have access to suggest otherwise. What would you have me do: lie, and say I think the market will decline? In this case, I think it will go up. Maybe I'm wrong. But I'm not lying.

  • Renting in Mass

    I guess all that buying activity you saw in January wasn't new homes…

    http://www.calculatedriskblog….

    • http://blog.redfin.com GlennKelman

      Did you see our observation that January and February numbers will be dreadful? We had very few closings in January. We had plenty of early-stage demand.

  • Roni

    My wife and I were in the market. With a little one getting bigger, we thought it might be time for us to trade up. However, I'm a federal contractor and with so much uncertainty in the budget process through the rest of this year, I'm heading back to the sidelines for awhile.

  • garyb

    I would like to NOT receive this insipid Redfin hack reporting again…t'is spam.

    • http://blog.redfin.com GlennKelman

      Click the unsubscribe link at the bottom Gary.

  • impartial

    You're bullish for whom? Buyers or sellers? If rates are going up and gas prices go up b/c of what's happening in the Middle East (not to mention high unemployment here, along with numerous restraints on buying), I'm assuming you are bullish mostly for buyers (and not sellers).

    • http://blog.redfin.com GlennKelman

      We actually think prices will stabilize rather than continuing to fall, which is good for sellers, not buyers. That said, I am worried about the Middle East too.

      • Yms

        What abouutNibiru and the planetary re-alignment and sola procession with the galaxy… Are you worried about too?

  • mlsquared

    More jail time for Lindsay, Oh My!

    Call me an optimist….but the issue is, owning a house has now re-aligned itself with the cost of renting a house. That's where the graph-line starts to to level out – stable-minded people will choose to own vs. rent….and they will bring stability to the housing market. If you plan on being in the same location for the next five years…..go buy yourself a house and take advantage of this opportunity.

    • Yms

      And CBS just cancelled 2 1/2 Men, I hope Charlie Sheen doesn't go intto foreclosure and what and what about those underemployed prosties hehan out with.. Adding to foreclosure and unemployment!

  • Frank Rizzo

    “But we think everything’s going to be ok, and that it will actually get better”

    Better for whom is the question?

    • http://blog.redfin.com GlennKelman

      We think prices will stabilize, which will help sellers, not buyers. But it's generally better for the overall economy too.

      • Americandan

        get a real job….

  • Americandan

    are you counting all these escrows that fall out? in other words its a shell game like obama's new job numbers. i have no faith in this real estate market because it's not stable.

  • Anti-inflation

    I don't buy your rosey outlook and euphoric sentiments about the prices. In fact, I think your inflationary views of the housing market is extremely short-sighted and destructive. You have taken a point of view that is shamefully biased. It is not always better to have prices go up. Downward prices are not exactly good either, but the follies of greed during the expansion years need to be corrected since prices have still not lowered far enough to pre-bubble prices nor has it reached normal inflationary price trends. Normalizing the price for goods allows regular people to have greater purchasing power and thus put real money back into the economy.

  • Tony

    Suggest you look at the site/blog Calculated Risk toay which has regular, very good analysis of the housing market and prices amongst other things. Recent graph -( see link) related unemployment rates to house prices historically using standard Case Schiller etc data and concludes it takes several years after unemployment peaks for house prices to bottom. Thus expect a couple of years of continuing low prices is the Calculate Risk conclusion.

    http://www.calculatedriskblog….

    • http://blog.redfin.com GlennKelman

      I love that blog, and read it regularly. We have actually included graphs from CalculatedRisk on Redfin's blog. I think Barry makes a good argument. I don't know why our own numbers are rising though. Thanks for the intelligent comment.

  • http://www.facebook.com/profile.php?id=3309492 Scott Buzzatto

    I love how you snuck in the Lindsay Lohan comment, haha!

  • badeconomy

    how can people buy homes when unemployment and rising price of oil is effecting the economy…this just doesn't make sense at all! Your number is up probably because it counts people who refinance, moving to smaller house, as I dont know much people saying they are having lots of money to spend on these days!I think the number wasnt right…check the details of it, you might see something.

  • Robin Hood

    The housing market will not increase until people have jobs. Period! Don't listen to the real estate industry. These were the same people that told everyone that they needed to buy a half million dollar home they couldn't afford back in 2003 because the price of houses would continue to increase. Where are those people now? Homeless or renting. There are always people in the real estate industry that are making a quick dollar off the sale of an overpriced home. Don't believe the hype!

  • Chris G

    There is nothing wrong with the data. There is just so much data ! and we need to look at the entire lot. Clearly stabilization is occurring already in many markets, although foreclosure rates are still higher than at any time since the peak of this downcycle and great depression times. Big Business-Auto sales are up as the companies have pared there models/production employees to be more efficient. Families have roomed together during this crisis to save on costs while unemployment has found its way in to households. That leaves empty homes and a significant reduction in of building new ones. As housing and recession cycle's go, its step by step, not from bottomed out to recovery overnight… its a 6-8 year recovery process. If we arent yet in the stabilization step, its right around the corner.

  • Investor J

    While I definitely respect and appreciate everyone's opinion, as it's always great to learn from others, I honestly find it hilarious that you guys think that prices will stabilize this year. I'm a full-time investor, so the numbers are key for me, and the numbers are pretty clear. There's FAR too much shadow inventory (ie. MILLIONS of homes), the banks are being FAR too slow in releasing it to keep their bonuses going (which is dragging out the entire process), unemployment is FAR too high to stoke any decent level of demand, lending requirements are FAR too stringent to provide those who are employed with easy access to capital to purchase, and a high percentage of those who want to move can't because they're locked-in to an underwater mortgage they can't exit.

    So, in summary, current and looming supply from shadow inventory is FAR too big and will be with us for another few years, while demand is nowhere to be found due to protracted unemployment that isn't improving at a rapid pace and even those who have a job are facing very strict lending standards so the banks can continue to shore up their balance sheets at a ridiculously low cost basis.

    But, you're right – prices are going to stabilize as of a week from now because all of the supply/demand fundamentals are in place – NOT. I don't mean to sound rude but it doesn't take my Wharton MBA to figure out that the probability of prices stabilizing as of next week is very low, which is why you're getting the negative reactions from me and the posts above. And I don't mean to sound rude but your article is forcing me to truly think about whether your organization is backed by NAR and/or other industry firms who are trying to put these positive spin stories out in a desperate attempt to stoke demand going into the prime selling season.

    Good luck to everyone.

  • Investor M

    At least we know that prices in California specifically will all be okay because of the weather! lolol. I think that is an economic indicator. Or maybe Redfin should make it one since they are clearly not looking at the real facts.

    http://www.ocgproperties.com

  • Codandrei

    Regression-to-the-mean analysis will indicate another 20-25% nationwide dip. The balance sheet of major banks are in Fairyland: “figures don't lie, liars figure” syndrome. The supply of residential housing stock is almost 2-years' worth of selling… The banks are afraid of flooding the market with foreclosures. Don't see For Sale and/ or Foreclosure signs although houses are boarded up and the lawns manicured.

    How long are interest rates going to remain negative is your guess as well as mine (probably, better than Bernanke's…). Keep the powder dry till you see the whites of their eyes.

  • En064

    I've been very closely watching the San Diego market and I don't see what you guys are speaking of. Very little is selling and buyers are not going for properties unless they are discounted by 15 to 25%. Also I disagree about what you stated that the banks are starting to work off the short sales. The short sales are over priced from regular sale in the area that I looking at. Buyers are wiser now then before and their not rushing in for nothing. You may see the regular rush from those who are in need of a home right away as the interest rate move, but those are the rookies and property virgins. Prices will have to come down an additional 10-15% in San Diego.

    • Professor Bear

      Just remember that Redfin works closely with Realtors, and Realtors are known to be perpetually optimistic about the housing market (e.g. “there has never been a better time to buy” applies 24/7, 365 days a year, every year!)…

  • Professor Bear

    Like Punxsutawney Phil, the US housing market’s serial bottom callers have once again made their perennial late-winter MSM appearance for something like the fifth year running (2007-2011). Why is it that they conveniently overlook the many reasons it truly is different this time? These include, but are not limited to the following:

    1) The $8K tax credit which was in force from Spring 2009-Spring 2010 had the effect of accelerating home purchases by the few qualified and interested buyers still sitting on the fence. Hence qualified and interested buyers who might otherwise have bought over the 2011-2012 period already bought.

    2) Interest rates won’t stay at a 50-year trough forever, and housing market fundamentals suggest that when they revert back towards historic norms, housing prices will adjust downwards in response.

    3) A proposal to wind down Fannie Mae and Freddie Mac is in the works.

    4) There is growing political support on both sides of the aisle for ending 90 or so years of U.S. federal housing policy to discriminate against poor renters in favor of wealthy homeowners, including reduction or elimination of subsidies such as the mortgage interest deduction.

    5) The recent housing bubble, which collapsed in 2006, was historically unprecedented in the magnitude of price increases above what is supported by fundamentals, such as local incomes and rent on comparable housing; a historical-sized bubble may take a historically long time to correct, and five years is not historically long.

    6) Efforts by the Federal Reserve and other federal government entities to stabilize housing prices can only temporarily offset the economic version of the law of gravity; eventually the market will find its way to an affordable bottom supported by fundamentals. Some markets are there already, but many others are not (including SD and DC).

    7) Estimates vary, but there apparently is something like 5+ million homes in shadow inventory the US used home market has to digest before the market finally bottoms out.

    8 ) The Case-Shiller/S&P Index has shown no sign of stopping its persistent month-after-month pattern of ongoing declines.

    9) Oil prices rising above $100/barrel suggest American households will be allocating relatively more of their family budgets going forward to food and energy costs, leaving less available to make the monthly mortgage payment on an overpriced home.

    10) Unemployment rates remain persistently high in many parts of the US, and the labor market remains persistently weak, suggesting this may be a very risky time to borrow hundreds of thousands of dollars to finance a home purchase.

    11) Lenders have very cold feet about making loans nowadays compared to their eagerness in 2006, back when the saying was that “anyone who can breathe qualifies for a mortgage.”

    12) The severe hangover of state government debt coupled with talk of a federal government shutdown calls into question the future viability of government spending and employment to offset private sector weakness in keeping the recovery going.

    13) The robo-signing foreclosure document processing scandal had the effect of greatly slowing the rate of foreclosure processing late last year, without necessarily slowing the rate of mortgage defaults. The adjustment will go into either a faster rate of foreclosure processing ahead, or a longer-than-anticipated period needed to work through the mountain of future foreclosures that will come back on the market over the next several years.

    14) The US mortgage finance system is indefinitely FUBAR, with only government-subsidized lending propping up the housing market at this point.

    If you are willing to ignore all of the above issues and any that I forgot to mention, it may seem perfectly plausible to conclude that 2011 may be the year the US housing crash will end. My impression is that the 5% further decline figure was pulled out of some serial bottom caller’s arse, but if anyone has evidence to suggest there is any substantive analysis to back it up, I would be interested to see it.

  • http://www.facebook.com/chrisfullam Chris Fullam

    I think we will see a brief spring bounce, as the combination of the end of the tax credit and then the always slow winter season brought down prices and the number of interested buyers. Im guessing it will take a small bounce off of that, but it will not be enough to make up the losses, and then it will resume the downward slide again.

    I think aside from the really hard hit markets, this real estate decline will continue over the next 5 years at a slow pace overall. There will be ups and downs, with the drops being deeper than the gains. That is of course if the gov't doesn't do something else to artificially inflate the market again…which can never be ruled out.

    • Professor Bear

      Given that the $8K credit may have pushed demand maybe 2 years ahead of itself, exactly where do you envision the new buyers coming from?

  • Professor Bear

    Can't find my long post I left here earlier which pretty much debunked this thesis that the housing market will bottom out by March; maybe it was too long, maybe it was too gloomy, or maybe it was too convincing — don't know…

    If you are interested, you can find it on Ben Jones' Housing Bubble Blog comments — thehousingbubbleblog.com.

  • Renting in Mass

    Glen said “Our own business went crazy January 1 — mid-February”

    I pointed out that new home sales stunk in January. 12.6 percent below December and 18.6 percent below January 2010.

    Glen replied “Did you see our observation that January and February numbers will be dreadful? We had very few closings in January. We had plenty of early-stage demand.”

    My response is that new home sales are calculate at contract signing (not closing). If there was lots of buying activity in January it would show up in new homes sales first. The January numbers seem to indicate the opposite of increased buying activity.

    I guess you were referring to early-stage demand when you said business went crazy. What does early-stage demand mean anyway? That people are looking at houses? I’m more interested in people buying houses. An increase in early-stage demand seems like a shaky stat to base predictions on.

    The strongest argument in your original post was that “Over that same span Redfin customers signing offers has increased an eye-popping 54%.” Tell us more about that. When was that four week span? How does that four week span compare to the previous year?

  • Renting in Mass

    Just checking to see if comments to this thread are being blocked… Some comments I left a few weeks ago never appeared.

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