Is the Bottom Already Behind Us?
A hedge fund manager who wrote an op-ed piece in the Wall Street argues that it is. His opinion is explicitly spelled out in the title: The Housing Crisis is Over. He argues that last month, April 2008 will most likely mark the pit of the housing downfall. Now that we are already in the early days of May – that means we’ve already 
turned it up a notch.
Some interesting facts:
- The current bust is already 3 years old.
- Home sales peaked in July 2005 and has dropped 63% since this peak
- Housing starts have dropped 50% and are back to one of the historical bottoms
Interestingly, the writer points out that affordability is the factor that led us into this bust and will lead us out of it. As home prices now are declining to somewhat more relatively managable (dare I say affordable!), buyers will come back. The percentage of income needed to make the average mortgage payment has gone back to the levels of the 1990s. While home prices have been on the decline, personal income has still creeping up, so that should help too.
The arguments and data make a lot of sense. I’m not sure what to make of it. In Marin, it seems like those $1 million+ homes that are in the best locations are still going quickly. Homes that I’ve seen and like and hoped that the price will drop after lingering on the market aren’t really hanging out for long at all. That’s just my thoughts on Marin and the general bay area. But when I think about the national housing outlook, it doesn’t seem to feel to me that the national bottom already came and went. I just hope home prices don’t ever sky rocket out of reach again (though they still seem out of reach).
