CalculatedRiskBlog suggested housing could face triple whammy by the end of 2009:
“We could be facing a triple whammy at the end of the year: the expiration of the tax credit, the end of the Fed mortgage-buying program and rising foreclosures.”
Thomas Lawler, housing economist
At least one of the whammy will not happen as Fed decided to extend the mortgage-buying program into 2010 (Reuter):
The U.S. Federal Reserve will likely extend the timeframe of its program to buy $1.25 trillion of agency mortgage backed securities (MBS) to give the market more time adjust to the loss of the central bank’s buying power, analysts said.
The slowdown in the pace might indicate that a transition has already begun and, at the current pace, the program will not hit its target until late January or early February, Goldman Sachs said in recent research.
Using its own calculations and Federal Reserve data as of the week ending August 5, Goldman Sachs said the implied end date at the current pace of purchases would be January 31, 2010.
End of first time home buyer tax credit will reduce demand; while end of moratorium plus ever increasing foreclosure rate will increase supply beginning next year. There will be a short window early 2010 when we may see depressing home price and still relatively low mortgage rate
Many people overlook Case-Shiller’s Index by Tier. One of the very obvious patterns we can see here is low tier homes observed the most bubble. However, when comes to busting, the patterns are not the same in different cities.
After reviewing five major cities (Los Angeles, San Francisco, New York, Las Vegas, Phoenix), we found low tier homes of Phoenix present the best investment opportunities: price has already been back at 1995 level.
Nationwide, home price will drop by another 17% from May 2009 level. More pessimistic than our poll results
Home Price Likely Stabilized or Overshot
Atlanta, GA
Charlotte, NC
Chicago, IL
Cleveland, OH
Dallas, TX
Denver, CO
Las Vegas, NV
Minneapolis, MN
Phoenix, AZ
San Francisco, CA
Home Price Further Declines Likely
Boston, MA
Los Angeles, CA
Miami, FL
New York, NY
Portland, OR
San Diego, CA
Seattle, WA
Tampa, FL
I don’t quite agree with the methodology in coming up with the above list. I think comparing home price index of individual city and Predicted Stable 20-City Home Price Index is too rough.
What I like is the following chart, which clearly indicates price-to-rent ratio hasn’t completely resumed to the historical average.
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