Real Estate Bottom Near?
Posted in Market Trends and Projections | By Blair Newman and Dave Emerson | Tags: Business, economic trends, Lakewood real estate, Long Beach Real Estate Trends, Market Bottom, Real Estate Market Bottom, Southern California Real Estate Projections
Maybe it’s not going to get as bad as we’ve been thinking?
Seems like I woke up to nothing but good news today.
Let’s start in Tokyo, where this week Alan Greenspan, apparently fleeing the U.S. for his own protection, proclaimed that the housing bottom isn’t that far away.
The former Fed chairman told a banking conference there that he expects the drop in U.S. home prices will probably end early in 2009 as housing inventory is reduced.
Here’s the really good news (if you’re a homeowner, at least. Greenspan thinks “…it is very likely that home prices will stabilize well before that.”
Greenspan said that in spite of apparently taking off his rose colored glasses, because he also thinks that the damage from the subprime crisis won’t be fully apparent for months. He also called the current credit crisis the worst in 50 years.
A bottom this coming winter has been the most optimistic of our “most likely” scenarios. In fact, the ongoing increase in Southern California foreclosures had us thinking the bottom’s more likely at least two years off (see yesterday’s update to our most recent projections post).
We’re not saying we agree with Greenspan, who we think had a lot to do with getting us into this mess (see “How We Got Into This Mess” for details). But he does have an awful lot of experience, access to more data than I can imagine, and a lot more credibility than Gary Watts.
Then I go to check the O.C.Register’s Mathew Padilla’s “Mortgage Insider Blog” to discover he’s finding signs that the bottom might be behind us. Now that’s the most optimistic scenario possible!
He sites two specific “signs:”
- “Our local superstar investment manager, Bill Gross of Pimco, has been buying mortgages.“
- Goldman Sachs CEO Lloyd Blankfein said the credit crisis is “closer to the end than the beginning,” and that the U.s. economy “will be on a growth curve again” by the end of the year.
Again, we’ve got two credible sources, but sources who may well have their own agendas.
Meanwhile, the Senate passed their version of the “Foreclosure Prevention Act” by a lopsided 84 - 12 vote. On first pass, we think the bill, which will probably be modified significantly in the House, does some things well, others poorly, and others not at all.
Overall, we think it’s a step in the right direction, and we feel the bipartisan support is significant, as well as the fast action. Here’s a link to today’s L.A. Times‘ article on the bill.
But foreclosures are still on the rise.
Like we keep saying, nobody really knows what’s next.
But today things look a little brighter than they did yesterday.
Maybe.
P.S. For something more uplifting, you might want to check out our next post, “A little perspective.”
Tags: Business, economic trends, Lakewood real estate, Long Beach Real Estate Trends, Market Bottom, Real Estate Market Bottom, Southern California Real Estate Projections
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April 11th, 2008 at 9:24 am
To be calling a real estate bottom is clownish. We aren’t even close. When people in California are hurling from convulsive reactions to losses, then we’ll see a bottom.
At least another 30% drop in SoCal real estate prices. Probably another 50%
April 11th, 2008 at 3:16 pm
I doubt it, Death…
April 11th, 2008 at 8:01 pm
Well, I don’t think it will be as extreme as “Death” put it; I do not think we are ‘near’ the bottom. I suspect at the earliest we will see a bottom is sometime next year.
The biggest reason, I think, that it hasn’t totally fallen apart is because smart investors are swooping in on properties, and because of the low dollar, foreign investors are buying up cheap property.
Its not as bad as we may think it is, but it is bad. If we have any more of the those “run on the bank” situations like on Bear Sterns then we might be in big trouble.
The country is in debt in a big way. Many people don’t have saving and have been on this spend/credit streak… it could end next year OR we could have very big problems in the near future.
April 12th, 2008 at 5:33 pm
No bottom in sight yet. Nope.
April 12th, 2008 at 11:17 pm
Can’t really disagree with any of the above.
Our favorite quote is still from Freddie Mac’s Chief Economist, Frank Nothaft. Speaking at last October’s California Association of Realtors Annual Financial Panel last October, we think he really nailed it:
“We’re in uncharted territory. We just don’t know. . . .” (For more details, if you haven’t already read it, you might want to check out our post from last November, “How low will prices go?“)