Home / Housing / “Mr. Mortgage” Warns: Home Prices Have Not Bottomed
Print Friendly and PDF

“Mr. Mortgage” Warns: Home Prices Have Not Bottomed

Written by Gary North on March 1, 2012

I have followed Mark Hanson for years. He has been right over and over about the housing market.

He predicts that there will be a seasonal increase in prices this summer, as always. Then the downward spiral will begin again in the fall.

The annual house price and sales volume ”bottom” has passed again. Feb & Mar NAR median and average prices reflect this. Beginning next month the monthly Case-Schiller will begin rising sequentially.

But an “annual” bottom and “the bottom” are two different things. When a major asset class has “bottomed” four years straight it’s a fairly powerful sign and trend. . . .

Bottom line,  for various reasons tireless expressed for the past several months (and years before that), I am not convinced that a “durable, escape velocity recovery” can occur yet.  Of course, “stimulus and transitory event driven demand spurts” certainly can occur, as evidenced by 2010 and right now.  But concluding this is “the” durable “bottom” is a leap I can’t make.  That’s because I still see lower seasonal highs, and lower off-season lows as the trend. . . .

I expect house prices to rise each month sequentially this spring and summer.  This is the exact same thing I “predicted” last year and the year before. Oh yea, and the 20 previous years as well while working and investing in the mortgage and housing sector.  It’s one of those no-brainer calls that in the midst of a lot of noise, can make you look really smart.  . . .

Bottom line, never bet against house prices rising MoM in the spring and summer. Seasonal house price increases always happen.  However, this year, like in 2010, we should also get YoY price gains.  This will really put the recovery junkies out over their skis. But it’s not all roses…existing house sales volume will begin a strong of disappoints in Q2 and new home sales volume will not live up to “escape velocity” forecasts. In fact, both existing and new home sales in March were lower than in 2010, a very important metric to note.  Moreover, mid-to-high end housing has no pricing power so house price compression will be more pronounced. So, soon we will be in the midst of rising seasonal prices and disappointing sales volume. Then the path of least resistance for analysts will be to call for lower off-season prices due to stagnating volume, higher rates, Euro risk, or an an economic shock brought about by any number of the plethora of gut wrenching events we face around and after the election time. . . .

In conclusion, this is not a healthy housing market;  rather an epic “stimulus” and “select supply driven” dash-to-trash trap, which will lead to housing market “paralysis” and lower sales volume and prices.   

To read the entire article, click the link.

Continue Reading on mhanson.com

Print Friendly and PDF

Posting Policy:
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

Comments are closed.