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Will the U.S. Housing Market Recovery Continue?
The Market Oracle ^ | 12-8-2012 | InvestmentContrarian - Sasha Cekerevac

Posted on 12/09/2012 5:24:32 PM PST by blam

Will the U.S. Housing Market Recovery Continue?

Housing-Market / US Housing
Dec 08, 2012 - 06:56 AM
By: InvestmentContrarian

Sasha Cekerevac writes: We have all heard the recent news that the housing market recovery is well on its way off the bottom. With home prices continuing to move up, many are questioning the long-term strength of the housing market. While there is no question that home prices have hit the lowest point and won’t return to those levels again, many are worried that they missed the housing market recovery, as prices have already risen significantly. I think there’s a few more years left for price appreciation in the housing market.

It’s been another month, and there’s more news that home prices continue to move upward substantially. CoreLogic, Inc. (NYSE/CLGX), a research and analytics firm, reported that. in October 2012, home prices jumped up 6.3% nationwide, including distressed sales. This is the largest increase for home prices since June of 2006. Another sign that shows the strength of the housing market is that this is the eighth consecutive month of year-over-year nationwide increases in home prices. (Source: “CoreLogic Home Price Index Marks Eighth Consecutive Month of Year-Over-Year Gains,” CoreLogic, Inc., December 4, 2012.)

Not only was October a good month for the housing market—the eighth month in a row of strength in home prices—but also CoreLogic is indicating that, for November, home prices including distressed sales will be up by 7.1% year-over-year. Excluding distressed sales, the firm expects November home prices nationwide will jump 7.4%.

The president and CEO of CoreLogic, Anand Nallathambi, stated, “We are seeing an ongoing strengthening of the residential housing market. Reduced inventories and improving buyer demand are contributing to stability and growth in home prices which is essential to the long term health of the housing market and the broader economy.” (Source: “CoreLogic Home Price Index Marks Eighth Consecutive Month of Year-Over-Year Gains,” CoreLogic, Inc., December 4, 2012.)

Naturally, the 6.3% nationwide increase in home prices for October is a positive sign that the housing market is well on its way to recovery. Some markets are experiencing increases in home prices far in excess of the national average. Arizona, as an example, is up 21.3% year-over-year.

The most important part of an economic recovery is clearing bad debts. The problem with the Japanese economy was that the banks made and incurred so many bad debts during the ’80s that they never cleared them off their books, which hampered the nation’s economy for decades. The strength of the American financial system is the ability of our economy to clear bad debts and allow strong participants to be active in new economic formation.

While a large part of these buyers are investors, clearly, the entire housing market benefits from increased demand, which is resulting in higher home prices. With interest rates expected to be low until 2015, investors will continue to pour into the housing market until there are alternatives for their investing dollars.

Clearly, this means that the housing market won’t have much competition for investing dollars for several more years. Accordingly, the move up in home prices will continue until interest rates start rising substantially.

The easiest way to determine the future of home prices is an inverse curve with interest rates. When interest rates start declining, home prices start rising. Conversely, when interest rates start rising, home prices start declining. Until interest rates start rising substantially, the recovery in the housing market will continue unabated, and home prices will continue to rise by a considerable amount.


TOPICS: News/Current Events
KEYWORDS: economy; housing; investing

1 posted on 12/09/2012 5:24:41 PM PST by blam
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To: blam

Housing recovery? What’s that? No such animal where I live.


2 posted on 12/09/2012 5:29:03 PM PST by Mich Patriot (PITCH BLACK is the new "transparent")
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To: blam

prices have already risen significantly? In Chicagoland they have risen 3%. But that is an aveerage of negative % for most neighborhoods and 5-8% for a few hot areas.

Since the loss for most neighborhoods was 50%, a 3% increase, if it existed, is really only 1.5% of the original value.

Our economy is bumping along the bottom, every time we hit a bump and bounce up someone says “recovery”. No, it is just a bumpy road at the bottom.


3 posted on 12/09/2012 5:30:26 PM PST by spintreebob
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To: Mich Patriot
I posted this seven months ago:

GARY SHILLING: Home Prices Will Plummet 20% From Here

4 posted on 12/09/2012 5:31:23 PM PST by blam
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To: blam

Asians from China are buying homes in DC area ... keeping prices steady.


5 posted on 12/09/2012 5:46:22 PM PST by 11th_VA (Keep your laws OFF my Big Gulp !)
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To: spintreebob

I think you have hit on what a lot of people miss, including the MSM pimps (math is not a requirement for journalists or politicians). If sales drop 50%, then it takes a 100% increase on the reduced sales to get back to where they were before. When I hear of those massive 1, 2, 3 percent increases in sales or sales price I really get a laugh because the increases are not large but also because the numbers are fake more than not.


6 posted on 12/09/2012 5:52:26 PM PST by RetiredTexasVet (The law of unintended consequences is an unforgiving and vindictive b!tch!)
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To: blam

The recovery you are seeing are investors snatching up thousands of foreclosed homes at a time.

They know they will be able to rent them out, a lot of them to those that have been foreclosed on. Wait till the market comes back (whenever that will be) and cash in.


7 posted on 12/09/2012 5:58:13 PM PST by unixfox (Abolish Slavery, Repeal The 16th Amendment!)
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To: blam

Only AFTER 4 more years of malaise.


8 posted on 12/09/2012 6:06:50 PM PST by CMailBag
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To: blam

this is mostly silly propaganda
or just silliness, period.

the overall housing market won’t recover until the 6 or 8 million defaulted loans (depending who you read) are cleared.

(ps: one place where there is a good housing market is so primarily because of overseas (Communist China) purchasers. But China has previously blocked its commie party apparatchniks from leaving, especially if they want to take their booty with them. So, Communist China could decide to shut that door again someday, we just doh’t know. If China does do this, you can kiss off the little housing bubble it caused...since local demand, demand from the remaining American citizens who still have employment... and who want places to live for themselves... is at prices of only about a third of their present higher levels)


9 posted on 12/09/2012 6:14:21 PM PST by faithhopecharity (--)
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To: unixfox

My BIL lives in Apopka, FL (metro Orlando). Two factoids he got from spending time with a top realtor in the area:

1) 70% of the homes being sold in central Florida are FHA 3% down mortgages. Think carefully about what that means.

2) There are still a large number of foreclosed homes that the banks have been holding off the market. As the market firms in his area, a big question is, how quickly will these homes be put back on the market?

Not mentioned: If ObamaCare (tax and regulation Armageddon) pinches the economy, what will that do to the housing market?


10 posted on 12/09/2012 6:17:22 PM PST by ChildOfThe60s (If you can remember the 60s.....you weren't really there)
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To: RetiredTexasVet

“If sales drop 50%, then it takes a 100% increase on the reduced sales to get back to where they were before.”

Ding Ding Ding!!! Winner!!!

The average home value declined around 25%. Just to get back to even, home prices must rise 50%. We are told that a month or two of small increases in home prices in isolated areas proves the economy is roaring and Hussein the Magnificent has saved us.


11 posted on 12/09/2012 6:25:22 PM PST by FerociousRabbit
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To: blam

This guy is on drugs. It will be 15 years before we see a recovery in the housing market.


12 posted on 12/09/2012 6:57:29 PM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: unixfox

In our area, prices are rising. But we’re in Florida and prices got so depressed there was no place to go but up.

We bought a 2nd house, a foreclosure in 2009 for around 90K (it was in miserable condition...but mostly cosmetic stuff we were able to do ourselves.)

The house had sold for $256K in 2006, and then the owner was forclosed on in 2009. Now it appraises out at around $170K. So yes it’s come up, but still anybody who bought in 2006 is way underwater. I know many who are able to make the payments on their homes, but their house is underwater.

Our son just secured a mtg. for 3.4% on a home they’re buying. The rates are still low so I think that could be fueling a rally. When I think back at the rates we paid for our first home (we had a mtg rate of over 10 percent back in the 80’s.) Young people who are fortunate to have a job have an opportunity to get a great deal on a home.

Home prices have dropped, rental rates, not so much, so it is a good thing for investors if you’re willing to be a landlord (I heard Buffett is buying heavily in real estate.)


13 posted on 12/09/2012 7:03:03 PM PST by memyselfandi59
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To: faithhopecharity

Boise market has been strong. Don’t see any reason it won’t continue.


14 posted on 12/09/2012 7:11:14 PM PST by The Iceman Cometh (Proud Teabagging Barbarian Terrorist Hobbit Son-of-a-Bitch!)
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To: The Iceman Cometh

great!


15 posted on 12/09/2012 7:14:37 PM PST by faithhopecharity (--)
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To: blam
Arizona, as an example, is up 21.3% year-over-year.

Good weather, good intrinsic value, and a market that got way overheated with speculation then overcorrected. But a large percentage of the buyers appear to be investment groups, many backed with foreign money. The Arizona job market is as bad as anywhere in the US. There isn't going to be much individual demand left, once the investors are satiated.

16 posted on 12/09/2012 7:27:37 PM PST by Mr. Jeeves (CTRL-GALT-DELETE)
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To: blam
There are a few new construction subdivisions starting back up near me, although I'm not sure why, local unemployment rate is still pushing 9%.

A year or two ago, screaming bargains on well kept older brick ranches could be found nearby, 3 br 2 ba, garage and full basement, 1800 sq ft on an acre for $110,000, you don't see those anymore, it's more like $150k or more for similar.

The only foreclosure to ever occur in my own very stable neighborhood in nearly twenty years was snapped up by an investor, renovated and sold in three days. I know what he paid for it, know what it sold for and Can pretty well guess what he sunk into it. He wasn't looking to get rich certainly, by my reckoning he made $25k on the deal.

So, it's improved from rock bottom. Must be psychological because the data honestly don't seem to support it.

17 posted on 12/09/2012 7:28:32 PM PST by RegulatorCountry
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To: Mich Patriot

I haven’t seen it either.


18 posted on 12/09/2012 7:34:54 PM PST by jospehm20
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To: blam

I think the market was starting to recover on the
prospect of a Romney win, now watch it collapse.


19 posted on 12/09/2012 7:39:35 PM PST by tet68 ( " We would not die in that man's company, that fears his fellowship to die with us...." Henry V.)
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To: Mich Patriot

Its like the unemployment rate....the more people on welfare ...the lower the rate


20 posted on 12/09/2012 8:01:42 PM PST by M-cubed
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To: blam

“Housing recovery’’!?! What ‘’housing recovery’’? If there where a ‘’housing recovery’’ then there would sub-divisions going up all over Jersey where I live which would mean Mexicans all over the place putting them up. No such thing happening here. Nada. Zip. Zero.


21 posted on 12/09/2012 8:33:09 PM PST by jmacusa (Political correctness is cultural Marxism. I'm not a Marxist.)
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To: tet68

Not much recovery around here. I had a house on the market nearly two years. It got an offer the week before the election, I was so afraid they were going to pull out after Barry won. I took a 75K loss on the place so I really didn’t see much in the way of recovery but I did sell the place, so I have one less mortgage to worry about.


22 posted on 12/10/2012 6:02:09 AM PST by DYngbld (I have read the back of the Book and we WIN!!!!)
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