Where is bottom of the housing market?

Here is market data that seems the most accurate so far, today in the Investors Business daily, they wrote about when will the bottom of the market hit. Though the U.S. is expected to pull out of the recession in the third quarter of 2009, the housing recovery is expected to be longer than that.

“Market bulls believe home prices could bottom in the second half of 2010, but the bears warn it could be 2013 before they finally trough. And once prices do reach a low, it could be years before they significantly rebound.”

Though some of the homes on the market are barely getting a showing or sitting desolate for days, we are seeing in Grover Beach, homes below $400,000, Pismo Beach below $500,000 and Arroyo Grande below $500,000 selling quickly and some in just a few days. The homes that are priced right and are a good value to the consumer, sell quickly.

IBD goes on to say that much of the recent sales increase is related to distressed homes, as a stampede of homebuyers snap up properties in foreclosure or through short sales on the cheap. "Foreclosure sales have picked up pretty dramatically in the past four months," says Alex Barron, a senior research analyst at Agency Trading Group Inc.

Banks are the aggressors of the market and are setting the prices right now. Unfortunately at the same time they are lowering the comparable properties. The banks businesslike approach to prices does not sit well with Mr. and Mrs. American Homeowner expects a drop in value, but are not ready for the aggressive price slashing that banks do.

“About 50% of current sales involve distressed properties, and he expects this trend to continue as foreclosures soar in the months ahead. About 2 million properties were in foreclosure in 2008, and he expects this number to climb to 2.5 million this year.”

The IBD goes on to state that the pending flood of foreclosures could mean buying opportunities for bargain hunters -- as long as they're prepared to hang onto the house for a number of years. "If you're a renter who just missed this cycle and didn't get in, right now is a great time to buy if your issue is the monthly mortgage payment," says Burns

The California Association of Realtors are highlighting that sales are up, but they do not show that prices are down. I think that this type of statement hinders their validity, because the consumer may now see their news as fluff.

“While sales may be increasing, home prices are a different story, in part because of rising interest rates and surging unemployment. The average rate on a 30-year fixed rate mortgage climbed to 5.59% last week -- its highest since Dec. 11 -- but retreated slightly to 5.38% this week, according to Freddie Mac. The nation's unemployment rate spiked to its loftiest level in more than a quarter of a century in May at 9.4%. Burns is predicting the jobless rate will hit 12% by 2011.”

“Expect to see prices start to rebound in 2011. While a bottom may be reached within the next year, it will be many months, and possibly years, before prices significantly come back.”

Once prices stabilize, it may take some time before there is a recovery in home prices.

Reference – Investors Business Daily