Investing in Housing: Hasta La Vista, Lereah!
By Ian Cooper
There is no housing bottom? Really? Where have I heard that before?
Despite bullish media “expert” tirades that would have you think otherwise, we are not nearing a bottom. They, like the resigning “housing cheerleader,” economist and senior VP of the National Association of Realtors, continue to get it wrong.
Would you believe David Lereah said, “We are comfortable this is now the bottom” as homebuilding giants posted poor numbers, as subprime companies fell to the wayside, and as Alt-A companies took it on the chin?
This is the same “respected” economist that also got it wrong multiple times in 2006. On May 25, 2006, as quoted by Real Estate Journal, he said, “This may be the bottom.” On September 25, 2006, as quoted by Bloomberg, he said, “The price drop has stopped the bleeding for housing sales. We think the housing market has now hit bottom.” And let’s not forget December 29, 2006’s Globe and Mail article that quoted Lereah as saying, “It appears we’ve hit bottom…”
Sorry, pal. We haven’t.
Says Freddie Mac, “The sharp decline of the subprime housing market offering high-cost mortgages hasn’t hit bottom yet.” It doesn’t help that the National Association of Realtors’ Pending Home Sales Index is down 4.9% in March after the 1.1% climb in February -- and that 1.1% gain may have been distorted by the Midwest building surge after the snowy winter season. The only thing showing a marked uptrend is the number of foreclosures: One of every 775 households is dealing with foreclosure.
If you’re still under the false assumption that we’re nearing this “mythical” housing bottom, I have a bridge to sell you.
Ian L. Cooper
Editor, Death Cross Trader
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