This guy has intriguing evidence, but his reasons are just ivory-tower guesses. Hat tip to DB for sending this along from businessinsider.com:
Barclays analyst Stephen Kim is becoming increasingly convinced that the housing market is near a bottom and that it will rebound in 2012.
He points to one key trend, which he is surprised is getting so little attention.
“In the absence of a government homebuyer incentive, prices for non-distressed home sales have stabilized for almost a year! In our opinion, this is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the Street. Meanwhile, we point out that this stability on the part of non-distressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices.“
Kim continues:
We are particularly intrigued by the inability of distressed sales to drag down non-distressed pricing. This separation between the two types of housing is critical for several reasons:
– The data shows that a distressed home is increasingly being seen as a poor substitute for a non-distressed home.
– This bifurcation between distressed and non-distressed homes will only widen with the passage of time.
– With buyers now discerning that distressed homes cannot be compared to non-distressed homes, concerns about the workout of foreclosures may be overblown.
Kim believes that stability in these prices in the absence of government subsidies is strong signal that home buyer sentiment is improving. Furthermore, he notes that stabilization in relevant economic indicators such as unemployment and consumer sentiment only strengthens his argument.
It sounds plausible until when there is only a 10% difference between the two classes (non and distressed).
But the argument breaks down about there not being a substitution effect (not to mention what the assessor for the bank loan says) when the spread gets to 20% or more as the distressed inventory continues to roll in.
While the chart shows distressed excluded getting better prices it’s still trending down slightly. I’d be much more willing to call bottom if it goes flat to slightly up. For the past 2 years we’ve been hearing the we’re near the bottom the bottom will be next year, but I’m not really seeing much evidence that prices aren’t going to continue trending down ever so slightly.
Doesn’t mean you’ve got to be scared about buying a house you really like/love but don’t expect to be lucky guy that caught the bottom before prices go soaring again.
“home buyer sentiment is improving”
hey Kim, where are the jobs? can’t buy house without income ( or walmart-income )
“In the absence of a government homebuyer incentive”
Does that include lowest mortgage rates on record since 1963 (thanks to government manipulation)? Or does the government have to be dropping bails of currency out of helicopters for it to count as homebuyer incentive?
Is Non distressed prices in San Diego still down ?
I agree SDTemp, How can it go up with low incomes and the jobs increasing are the Walmart wages. What about all the bank houses
I read maybe we need a cash for clunkers program for houses to clear the inventory.