Evidence That US Housing Has Hit A Price Floor

Here's a terrific article by Don Miller of Money Morning, on the current real estate market....and what's ahead.


If you are a real estate investor, one of the most important questions on your mind is when the housing market will hit bottom. According to Andrew Waite, publisher of Personal Real Estate Investor, some markets like the West Coast have already bottomed and will start swinging upward in the fall.

The U.S. housing market has been the epicenter of the global financial crisis. And many analysts believe that by watching it, investors will be able to better predict an economic recovery.

Unfortunately, because housing market data is an amalgam of a wide range of local markets, it is notoriously difficult to follow.

“It’s like a weatherman who combines conditions in Nome, Alaska and Clearwater, Florida and issues an “average” national forecast of 45 degrees,” says Andrew Waite, a former institutional investor who is now the publisher of a magazine focusing on real estate investing. “Real estate markets are by their very nature ‘hyper-local.’ Averages simply don’t apply.”

Waite is the publisher of the Personal Real Estate Investor, a magazine for investors who buy houses or condos to manage for income or to fix up and sell for a profit.

The housing market is too fractionalized to put a finger on an “average” price, Waite says. Real estate is segmented by individual neighborhoods, and is further subdivided by price points and such price-influencing factors as condition, cash flows - and even cap rates on rental properties.

To combat this problem Waite compiles and verifies data directly from records kept by local Multiple Listing Services. Using those sales records, Waite determines the supply inventory of major markets, giving him the hyper-local data that reveals a more complete picture of individual markets.

And according to Waite’s analysis’ the real estate rebound is already underway.

“The formula’s pretty simple,” he says. “As housing inventories shrink in real estate markets around the country, demand and prices go up.”

After examining the statistics for March, Waite sees a clear bottoming pattern, at least in some markets. If he’s right, the Western United States is already making a comeback and the ripples of resurgence will soon make their way to the Midwest and then to the East Coast.

What’s more, the improvement from year to year indicates the bottoming sequence will soon have prices on the rise.

Housing Markets in Western U.S. Have Already Bottomed

Remarkably, Waite’s research reveals the downtrodden Las Vegas housing market has already bottomed and is currently “balanced” between buyers and sellers. Housing markets in Seattle, Los Angeles, Phoenix and Denver are on the move too:

* Phoenix’s MLS housing inventory is 7.33 months, down from 19.1 months last year.
* Denver’s current inventory is 5.59 months, down 35% from a year ago.
* San Diego’s inventory stands at a paltry 4.19 months, down 58% from a year ago.
* And Las Vegas’ inventory stands at just 6.25 months, down a whopping 64% from an inventory of 17.5 months in 2008.

Waite sees the trend on the West Coast as a leading indicator that the worst is behind us.

In short, if you’re in one of those depressed markets where prices are still dropping, relief may well be on the way.

To see the rest of this story, go direcly to:

http://www.nuwireinvestor.com/articles/evidence-that-the-us-housing-market-has-bottomed-53030.aspx


Published on: Tuesday, June 02, 2009