Mixed Signals on Whether the Housing Market has Hit Bottom
On the one hand, the president of the St. Louis Federal Reserve Bank said today that the U.S. housing market has already hit bottom. James Bullard also said he expects unemployment to fall below 8% this year. Bullard conceded he was more bullish on the market than other forecasters.
Another pundit states that, because cars are wearing out and living with mom and dad and several cousins is wearing thin on countless nerves, demand for autos and rental housing will soon begin to rise.
On the other hand, some market analysts say that it’s still too early to say housing has reached the bottom. Prices are still falling, and 19 of 20 cities reported by the Case-Shiller Home Price Index saw home prices decline in November over October of 2011.
One problem is that GDP is growing at the slowest rate in any non-recessionary year since 1947, according to Credit Suisse. Another is that millions of Americans are still underwater on their mortgages. And 13 million are still unemployed.
The good news is that the oversupply of housing is starting to dry up. In December, it reached a level we haven’t seen in nearly seven years.
So whether we’ve already reached the bottom, or we are getting close to hitting the bottom, one thing is for certain: the housing market should definitely be in recovery… sometime this year. That much, most everyone agrees on.