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Has the housing market finally bottomed?

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October 06, 2010 – Comments (7) | RELATED TICKERS: KBH , SPF , TRC

Things to consider:

Investor Pessimism is still persisting, these stock are continuing to sell below their cash/share values:

KBH,SPF,BZH,MDC

Additionally, an investor I respect, Michael Price, has made a heavy push into TRC.

What do you Fools think? Is it time for turnaround? Or could this just be the next chapter in 'Bottom Picking Blunders'?

7 Comments – Post Your Own

#1) On October 06, 2010 at 1:52 AM, BillyTG (98.20) wrote:

We're not even close to out of this mess and it goes well beyond real estate. Hold out for another year or two if you're looking to buy a house (disclaimer: all real estate is local, so this might not apply to you).

http://www.youtube.com/watch?v=kunB4SnAh4g&NR=1

http://www.fool.com/investing/general/2010/07/30/how-much-further-do-home-prices-need-to-fall.aspx

http://www.youtube.com/watch?v=a3g6Yr5S7cg&feature=related

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#2) On October 06, 2010 at 5:47 AM, WCGekko (< 20) wrote:

The Government has dedicated much of its capital injection towards the housing market by creating incentives for new homebuyers. However, this wont pay off because extending borrowers' loan terms for a few more years just keeps people in houses that they cannot afford. It also directs money towards an area that will not fuel an economy, in contract to a more needed channel via the stock market. As companies continue to not hire, and increases on capital gains and dividends continues to sore, the housing market's recovery will be dismal.

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#3) On October 06, 2010 at 6:07 AM, cbwang888 (27.32) wrote:

With more QE from fed, almost every asset class, including real estate and housing, will find bottom due to USD debasement. It happened so fast to prevent massive foreclosures in comerical real estates when money pumped into banks during QE1.

One thing I'm not quite certain is when US T-bonds finally collapse (US lose its AAA rating), what will happen to interest rate and USD? Short term reaction and long term? Hyperinflation in US or yet another credit crunch?

I tend to think if US bonds go down, interest rate will go up causing muni-bonds and coporate bonds to burst. Then highly leveraged firms will flop to cause massive liquidation, which trigger another short term credit crunch?

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#4) On October 06, 2010 at 7:16 AM, TMFSinchiruna (56.35) wrote:

No, no, no, no, no, no, and more no. Sorry ... that is the cold hard truth with respect to housing. The economiy is heading into double-flop, a fresh financial crisis is upon us, and all the quantitative easing in the world won't change the trajectory not avoid the deleveraging of the global derivatives market. Fresh revelations about how devoid of true collateral those securitized mortgage vehicles truly are will force the continued deleveraging of the housing market. It is 100% unavoidable, though in all likelihood more billions will be wasted trying to delay the inevitable.

Sinch

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#5) On October 06, 2010 at 12:39 PM, davejh23 (< 20) wrote:

"With more QE from fed, almost every asset class, including real estate and housing, will find bottom due to USD debasement. It happened so fast to prevent massive foreclosures in comerical real estates when money pumped into banks during QE1."

Unless incomes rise rapidly as the dollar is devalued, housing will not rise along with other asset classes. If wages remain stagnant for a time, and food and fuel costs spike, housing could actually crash...especially if interest rates are rising at the same time. Without wage growth, housing could fall another 50% even with USD debasement...below the cost of construction...it could take a decade+ for this to work out...

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#6) On October 06, 2010 at 7:45 PM, cbwang888 (27.32) wrote:

davejh23,

Investment banks, with cheap credits, could setup some real estate investment trusts (REITs) focus on buying single family houses from banks' inventories and rent them out to distressed main street folks.

Banks know how to transfer their losses ...

No way in my opinion house price will fall another 50% ...

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#7) On October 07, 2010 at 12:58 PM, Melaschasm (65.15) wrote:

If the economy double dips, we will likely see another (probably small) drop in house prices.

If we avoid a double dip we will likely see prices stablize, then rise. This second option will likely occur with either stagflation or a return to economic growth.

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