Median Home Price Falling Closer to levels of Qualified Median Income
Realize that I have probably worn out my welcome with this breakdown, but one key factor in the housing data today was the median home price.
From This article: http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-032309.aspx?icid=dispatch_090323
Existing-home sales showed a surprising 5.1% jump in February, the National Association of Realtors said in a report today, the biggest percentage gain since July 2003.
The unexpected increase was partly due to "deep price discounts," the NAR said, and was well above economists' expectations of a 0.8% to 0.9% decline. The median sales price fell 15.5% to $165,400 from February 2008.
Inventories of unsold homes rose by 5.2% to 3.8 million, which represents a 9.7-month supply.
At 165,400, the median home price is falling within range of the historic range with median income.
Article from 2007 that I have linked here too many times. http://efinancedirectory.com/articles/The_Dangerous_Disconnect_Between_Home_Prices_and_Fundamentals.html
In my humble opinion/estimation, based on current interst rates and employment levels, we are within 10-15% of the bottom of the housing price decline. This does not mean that it is the bottom of the market, or a time to purchase homebuilders or REIT's. It just means that housing prices are nearing equilibrium with qualified demand.
With 9.7 months of supply, and rising unemployment, there are many quarters of pain ahead. This is not a "recovery", but an equilibrium or stabilization. Many will argue that we will overshoot the bottom, and prices have further to decline. This could be the case still, but I believe that if this occurs the market will return to these levels and stagnate there for some time.
What does this mean for my investments? I do not have the answers, but I do know that the companies that survive this meltdown and that maintain their economies of scale, will awaken to a bleak competitive landscape, with reduced availability of leverage for their competitors to use to try and take market share. There has been and will continue to be a "divergence" (stolen from Floridabuilder" of investment dollars from these survivors and the pretenders.