Tag Archives: Home Sales

5 Reasons 2012 will be the Start of A U.S. Housing Recovery

By Walter Kurtz, Sober Look

As we await the fully anticipated downgrade of France as well as Austria and others in the eurozone before the long weekend, it is difficult to think positive thoughts about the US housing market. But at the risk of getting bombarded with more angry emails, here are five reasons 2012 will be the year the US housing market will start recovering.

1. Housing inventory levels have tightened considerably:

A. Existing homes for sale number is near the long-term average after the revision.

Single Family home sales(millions, annualized, source: Capital Economics)

B. The number of unsold homes (new and existing) as a fraction of the population in the US is at a 7-year low.  As household formation picks up, so will the demand for homes.

Total number of unsold homes as% of population (Bloomberg)

C. Housing starts continue to stay subdued with only limited inventory added.

Single family housing starts (Bloomberg)

2. Home sales are stabilizing in spite of QE2 ending last summer.

Existing home sales (Bloomberg)

3. Downpayment required on new mortgages is back down to 20% versus around 25% in 2010.

Loan-to-value on new mortgages (Capital Economics)

4. New mortgage payment affordability is now at best levels in recent history.

New mortgage monthly payment as % ofmedian income (Capital Economics)

5. The market is telling us recovery may already be under way.  The chart below shows the share price history of Hovnanian Enterprises, a company that builds single-family homes. The market is anticipating improved demand for homes.

HOV share price vs SP500

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A Pickup for Housing in 2012?

A Pickup for Housing in 2012?

by CalculatedRisk on 12/28/2011  

Residential investment made a small positive contribution to GDP in 2011, for the first time since 2005. And construction employment turned slightly positive in 2011.

Now the question is what will happen in 2012? I think some pickup is likely, but I’m not as optimistic as some other people …

From the WSJ: Hedge Funds See Rebirth for U.S. Housing

Hedge funds run by Caxton Associates LP, SAC Capital Advisors LP, Avenue Capital and Blackstone Group LP have been buying housing-related investments, betting on a rebound. And formerly bearish research firm Zelman & Associates now predicts a housing pickup, as does Goldman Sachs Group Inc.

Even some housing skeptics acknowledge that real estate may no longer be the drag it has been on the economy. … “I’m sold that it’s a bottom,” says James Bianco, who runs Bianco Research, in Chicago. “It’s gone from a negative to a nothing for the economy,” …

Ivy Zelman [predicts] that rising rents will push would-be buyers to purchase homes. A housing recovery isn’t “happening as fast as everyone would like,” she says. But there are “a lot of pillars in place to give us some optimism.”

Of course there are still housing bears:

“The smartest money in the world has been carried out on stretchers betting on a true recovery for housing,” says Mark Hanson

I think we will probably see some increase in new home sales in 2012, but it will be from a very low level (around 300 thousand new homes will be sold in 2011, a record low since the Census Bureau started tracking new home sales in 1963). I’ll have more on housing and residential investment soon.

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