It's Here -- Or Maybe Not

In "Grumpy Old Permabear," I noted that "a growing number of commentators are suggesting that the worst is behind us," and included (among others) a link to a post by Calculated Risk, "The Housing Bottom is Here." While I certainly can't say for sure that Bill McBride is wrong (FWIW, I am a big fan of CR and have been a regular visitor since its earliest days), I did point out that "genuine bottoms have, historically at least, gone unrecognized until well after their arrival."

On the flipside, long, secular downturns -- like those that invariably follow bursting bubbles -- are littered with endless claims of a recovery being at hand. As it happens, Weakonomics has compiled an extensive collection of such pronouncements about the current bear market, stretching back almost six years, in "The Megalist of Calling the Housing Bottom." Here are some examples:

1/31/2012 Homeownership rates fall to 66% as downturn nears a bottom – USA Today
1/10/2012 Has The Housing Market Hit Its Bottom? – Forbes
12/8/2011 Is the Housing Bottom Finally in Sight? – Kiplinger (my favorite!)
9/27/2011 This Has To Be The Housing Bottom – Seeking Alpha
6/21/2011 The Housing Bottom Is Here: Economist Russell Price Explains – Daily Finance

...

2/8/2007 Housing still on down slope Economists say no recovery until midyear; prices face record fall – Market Watch
12/21/2006 Housing ‘close to bottom,’ realtor-group economist says – Market Watch
12/5/2006 Home builders see bottom of housing slump – CNN Money
11/15/2006 Housing slide may deepen; New forecast sees bottom in 2008 – Boston Globe
10/6/2006 Greenspan Says `Worst’ May Be Past in U.S. Housing – Bloomberg

Otherwise, it's been a while since I last highlighted a chart like the one that follows (the unedited original comes via Business Insider), but I thought it might be something worth noting to those who believe the Fed actually knows what it takes to look after or "fix" the economy (or whatever else Bernanke & Co. claim they are responsible for):

Comments

[roger]

US has no motor,consumerism and real estate dead.
Europe of the brink of implosion, this according
to Chief economist Chris Probyn on a trip to Paris.

[notjonathon]

He did say that he wasn't calling a price bottom, but rather a construction bottom. I think that falling prices will drag out for years in areas where the bubble has only deflated, not burst. Think coastal California and New York. Or Kailua-Kona, where sales have hit a brick wall even though prices have not yet followed.

Prices in the CA Inland Empire, San Joachim and Sacramento valleys are harder to predict, since they have fallen so far already. On the other hand, because so many new subdivisions were built during the bubble, owners in entire neighborhoods are underwater, preventing any meaningful clearing of inventory.

That's without the storm clouds of deleveraging, fuel shortages, crop devastation. . .

[Anon]

Mike,

I'm a big fan...usually...but this is just idiotic. As an initial matter real estate bubbles generally bottom out about 7 years after the peak, but more importantly you're contrary "evidence" in your post is 1) recent enough not to cast doubt on CR or 2) old and transparent realtor spin.

Not up to your standards buddy.

[Anon]

Forgive the typos in the prior post. Worth pointing out that the chart is a non sequitur - inflation would be good for housing, so, um, yay helicopter Ben (?!?!?!?).

Again, plenty to be pessimistic about, no need to go derp on us.

[John G.]

CR is wrong. In San Diego in the last housing bust, prices only bottomed after three factors were in line (I used stepwise regression and lots of data to sort this out): employment growing, defaults falling, and home sales increasing.

Those three factors are good proxies for wherewithal to pay, removal of downward pressure on prices, and addition of upward pressure on prices, respectively.

Thus, the San Diego experience seems, theoretically, a reasonable proxy for what we could experience nationally.

With the big household debt overhang still to be written off or paid down, there is no way that employment will be growing, defaults falling, or home sales increasing in a sustained fashion for years. Hence, the bottom in housing prices in years down the road, seems to me.

That is my read of the housing situation, and I happily remain a renter (since '04) with my capital parked in gold and silver.

[roger]

Wall Street Rally Has the Fed to Thank
while seniors collect the crumbs, IE:
0.79% interest on saving accounts, than you
helicopter Ben.

[No bottom for this lady]

JPMorgan Chase Caps Martin Luther King PR Campaign By Foreclosing on Civil Rights Activist

Now that campaign is turning into a public relations nightmare for the banking behemoth. Chase is now threatening to foreclose on 78-year old, Helen Bailey, a former Nashville area Civil Rights activist who stood up to police attack dogs, tear gas and fire hoses for her God given rights.

Ms. Bailey couldn’t keep up with her mortgage payments and attempted to refinance with another mortgage company and would work with her to let her stay in her home until she died. The only thing she asked from Chase was a $9000 principal write down.

Chase refused and now are threatening to foreclose and evict this hero of one of the darkest times of American history.

http://jessescrossroadscafe.blogspot.com/2012/02/jpmorgan-chase-caps-martin-luther-king.html

[ruralcounsel]

As the legal hurdles for illegal robo-signed foreclosures are only now getting cleared, there is a new wave of foreclosure property about to hit the market. Hardly seems like time to be calling for a bottom to the market.

[Doable Finance]

Talking about bubbles. The burst may be near in student loans.