There’s a lot of talk that the worst is over.
Every now and then, we get to read a good opinion from a wise columnist. Robert Cryan of breakingviews.com reacts to the somehow “good” numbers in the economy that have sprung up in these past few weeks. He writes, “Is the U.S. housing market approaching bottom? The rate of decline in U.S. house prices moderated in February. Prices fell 2.1%, according to the Case-Shiller composite index of ten cities. Better isn’t synonymous with good. The decline is less dramatic than January’s 2.6% fall, but it’s still an awful figure. Prices have fallen 18.8% over the past year, according to the index… One month doesn’t make a trend, even for a journalist or desperate realtor. Spring is also the busiest time for selling homes, so prices tend to be a bit stickier than they are at other times of the year.”
And why can’t we agree more? We’ve constantly come across news reports that seem to have a more positive prognostication than Cryan’s. It’s a pity how some analysts refuse to acknowledge that the drought in the property market is still far from over. Suppose we consider other housing data like the National Association of Realtors’ March figures. Only first-time buyers are fueling the market and saving the industry from more drastic plunges. Still, month-to-month fluctuations are evident and this can’t be a sign of market bottom, really.
And for other surveys, some numbers can be deceiving. Houses that are taken off the market are not accounted mostly in the results so there could be a jump in the data that may signal improvement but in reality, remain misleading. It’s also unreliable to depend on median prices too. This is why Cryan hits the point perfectly. Strong evidence is hard to find to substantiate market bottom claims today.
We also think that sales in the summer usually rise along with home values but at the last quarter, expect things to be the opposite. Also, adjustable rate mortgages have delayed their recast and the market should brace itself for the worst. Numbers may not lie, but they can mislead indeed.