Finally - The Housing Crisis is Over!
May 6th, 2008 categories: Finance, Market Trends, Real Estate News
Yes, folks, that’s right. According to today’s Wall Street Journal (WSJ) the housing crisis that’s been upon us since 2005, is at an end. Kind of, anyway. The article’s author, Cyril Moulle-Berteaux, is a managing partner of Traxis Partners LP, a hedge fund or investment advisory firm based in New York city. He cites a number of indications that the worst of the housing “crunch” is behind us, and that current trends indicate we’ve bottomed out, or, as he puts it, “is bottoming out.”
Moulle-Berteaux mentions the market indicators include:
- Homes sales peaked in 2005. New home sales are down 63% from peak levels of 1.4 million.
- Housing starts have fallen more than 50%, and adjusted for population growth, are back to 1982 levels
- Many that were priced out of the market during the downturn can now afford to get back in. Three primary factors have contributed to this:
- Home values have fallen
- Mortgage rates have decreased
- Personal income has increased
Home construction deline is another indicator cited by the author. New home inventories peaked in July of 2006 at 598,000 homes. That figure had declined to 482,000 by the end of March. This decline is due to a drop-off in home completions which have resulted in an increase in the rate of undershooting new home sales. This “under supply” will reduce the inventory. He expects a seven month inventory supply by the end of this calendar year. Once we reach the five month supply mark, which Moulle-Berteaux predicts will occur in ‘09, home prices should hit bottom.
And, while the WSJ’s news is welcome, these views aren’t shared by all, as evidenced here.
Forecasting the long term direction of any market is risky at best. I don’t know about you, but, at this point, I’ll take Mr. Moulle-Berteaux at his word.
