Ever since the data made it obvious — at least to us — that Housing was topping out in 2006, we have watched with various degrees of bemusement the annual ritual that is the erroneous housing bottom call.
Many casual observers of Housing (along with a few pros) fail to understand the difference between monthly seasonality and actual improvement. This first came up in March 2008, when the WSJ screwed the pooch on February 2008 existing home sales, incorrectly reported Wave of Foreclosures Drives Prices Lower, Lures Buyers. Actual EHS were down 23.8% year over year. The Journal was suckered by how the NAR spinmeisters shaped the narrative, emphasizing monthly data (at least from March to September).
These bad calls reoccur every Spring, as the data begins its annual improvement. I use the phrase Perennially Wrong Bottom Callers and its acronym PWBC™ (I may have to trademark that!).
This year, the unusually mild Winter threw the perennially wrong bottom callers into a tizzy. The January and February data gave them the early false belief that the bottom was here. Subsequent data demonstrated that it wasn’t.
Exactly how often have the PWBCs been making their really really bad housing bottom calls? As is often the case with equities, from the peak of the market all the way down. Searching for terms like “Bottom, turnaround stability recovery” along with “Real Estate Housing Homes Residential” reveals a broad and deep reservoir of PWBCs.
Spring has sprung, and the usual suspects are up to their old tricks. There are so many bad PWBC that it is really difficult to make special mention of anyone, but we are compelled to point out two PWBC in particular: Alan Greenspan, who was wrong early and often, and the National Association of Realtors, whose spin has been astoundingly consistent, bullish and wrong, the whole way down.
To help keep all of the bottom callers honest, what follows below is a chronological listing of articles and commentary (with links) over the past 7 years showing many of the bottom calls since 2006. Someone with Lexis/Nexis and more time than I should make this into a legitimate study.
2006
Housing Turnaround? Home Sales Up in March (ABC News, April 25, 2006)
Home builders see bottom of housing slump (CNN, December 5, 2006)
New home sales: Back from the dead? (CNN, December 27, 2006)
Read Between All Those For-Sale Signs (NYT, August 27, 2006)
“the latest housing numbers seem like they could be a turning point.”
“Perhaps the biggest reason to be skeptical about a real estate crash is that the country has not really suffered through one before”
New Signs of Cooling in Housing (NYT, August 24, 2006)
“While prices are sliding, most economists are still predicting that they will not fall very far.”
NAR’s Existing Home Sales & Prices (TBP, November 2006)
Greenspan Says `Worst’ May Be Past in U.S. Housing (Bloomberg, October 6, 2006)
“Fed Vice Chairman Donald Kohn, a former top adviser to Greenspan, also said this week that while he doesn’t know how long and deep the housing slump will be, it probably won’t sink the U.S. economy into a recession.”
“Former Federal Reserve Chairman Alan Greenspan said the ‘worst may well be over’ for the U.S. housing industry”
Home builders see bottom of housing slump (CNN, December 5, 2006)
“The year-long slump in the housing market may be near a bottom, say home builders”
New home sales: Back from the dead? (CNN, December 27, 2006)
“David Seiders, the chief economist with the National Association of Home Builders, agreed that the supply of homes on the market is still too high to say that the report signaled a recovery, yet he’s encouraged by the solid sales pace in this report. ‘What I’ve been looking for is stabilization, that’s what I’m reading from this,’ he said’”
2007
U.S. Realtors see gradual existing-home sales rise (Reuters, February 7, 2007)
“U.S. existing-home sales have likely hit bottom and should gradually rise this year”
IMF believes US housing market may bottom out (Reuters, April 11, 2007)
“The IMF’s forecast for another year of strong growth, with some risks, is based on the notion that the U.S. housing market will bottom out and a slowdown in U.S. capital spending will be reversed, a senior IMF official said on Wednesday.”
Housing Market Nears Bottom (Forbes, May 25, 2007)
“The housing market is about to hit bottom.”
Hovnanian Chief Says Housing Bottom Is `Very Near’ (Update6) (Bloomberg, September 14, 2007)
“Hovnanian Enterprises Inc. Chief Executive Officer Ara Hovnanian said the U.S. housing market is near the bottom”
Housing Predictor Reports U.S. Real Estate Turnaround (RISMedia, May 22, 2007)
“More than half of the nation’s housing markets are appreciating or have at least stabilized, according to a special report by Housing Predictor”
“Housing Predictor expects foreclosures to continue to increase throughout the remainder of the year, and level off toward the end of 2007 as more investors purchase properties.”
Sales & Volume Begin to Flatten Out! (Peterson Realty April 2, 2007)
“Barnstable County Register of Deeds, John F. Meade, reports that the volume of real estate sales in March 2007 was down 1.1% from March 2006 volume and the total value of sales was down 1.25% from the previous year.”
Whoops! Another 2009 turnaround estimate (Arizona Real Estate Notebook, July 25, 2007)
“Although it is for the new home market, RL Brown’s new estimate is the market won’t turn around until 2009.”
“Brown expects the market to remain at the same level in 2008 before beginning its rebound in 2009.”
Real Estate Outlook: Will Housing Turn Around? (Realty Times, December 31, 2007)
“outlook from Dr. Lawrence Yun, chief economist of the National Association of Realtors: ‘The broad trend over the coming year will be gradual rise in existing home sales, but because sales are exceptionally low for the final months of 2007, total sales for 2008 will only be modestly higher than for 2007.'”
“Dr. David Seiders, chief economist of the National Association of Home Builders, had this to say: Our ‘housing forecast shows systematic improvements in home sales by the second quarter of 2008′”
2008
NAR Housing Market “Bottoms” (TBP, January 2008)
Florida Real Estate Market Reached Bottom in 2007; Market Expected to Recover from ‘Indigestion’ (Reuters, January 7, 2008)
‘The market has some indigestion now, but housing markets will return to normal during the next few years’
U.S. Home Sales to Reach Bottom in 2008, Bankers Say (Update3) (Bloomberg, January 14, 2008)
“U.S. existing home sales will reach a bottom in 2008”
Zell Sees Start of Housing Recovery in the Spring (CNBC, February 26, 2008)
“The US economy will avoid recession as the housing market begins to recover this spring, according to billionaire investor Sam Zell.”
WSJ Confuses Seasonality with Recovery: How Counter-Productive is Realtor Association Spin? (TBP March 25th, 2008)
Wave of Foreclosures Drives Prices Lower, Lures Buyers (WSJ March 25, 2008)
Existing Home Sales, Non Seasonally Adjusted, Explained (TBP, March 25th, 2008)
Bottom’s Up: This Real-Estate Rout May Be Short-Lived (Barron’s, July 14, 2008)
“This real-estate rout has been more painful than prior ones, but it may be shorter-lived. Indeed, there are early signs of recovery.”
“Yet, such pessimism appears overdone, based on much recent data. Sales of existing homes are showing tentative signs of increasing, while the plunge in prices likely is nearing an end”
“Still other numbers suggest prices are close to bottoming.”
“‘Every time this has happened before, housing-market activity has rebounded within a quarter and caught experts by surprise,’ Chip Case says.”
“Jim Paulsen, chief investment strategist of Wells Fargo’s primary investment unit, expects home prices to steady by year end, with the pace of foreclosures slackening shortly.”
“the available data suggest the scary dive in home prices soon will be over.”
Cramer Calls the Housing Bottom (CNBC, August 27, 2008)
“The economy will never recover if housing doesn’t find its footing first. But when will that happen? Cramer said he expects a bottom by the third quarter of 2009.”
Real Estate Markets Most Likely To Rebound (Forbes, October 29, 2008)
2009
Commercial Real Estate Market to Hit Bottom Next Year, Urban Land Institute (Realty Times, January 7, 2009)
“The cyclical real estate markets always comes back, and they will this time too, but not anytime soon,’ said Tim Conlon, partner and U.S. real estate”
“real estate industry experts expect financial and real estate markets in the United States to bottom in 2009 and then flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows”
U.S. Housing Market May Bottom in 2009, Zandi Says (Bloomberg, February 9, 2009)
Home Price Bottom Predicted by Year End (The Truth About Mortage, February 9, 2009)
“The good news is that a home price bottom is expected by year-end, according to one of the nation’s most respected economists.”
“Since their peak in 2006, home prices have fallen about 25 percent, per a Moody’s Economy.com report issued today, but the end may be near.”
“But with home prices falling to more affordable levels and homebuilder inventory sliding to more appropriate positions, stabilization is within reach.”
Home-builder shares jump as February new home sales increase (Marketwatch, March 25, 2009)
Real Estate–What Recovers First? (Forbes, March 18, 2009)
Existing Homes Surprise: Sales Turn Up, Prices Firm (IBD, 3/23/2009)
Signs of life emerging in housing sector (MSNBC, April 7, 2009)
“ ‘Are we at the bottom?’ asks Christopher Thornberg, an economist with Beacon Economics. ‘We are getting close.’’’
“But after a three-year bust, it’s a sign that some markets might be moving in the right direction.”
Real Estate Outlook: A Turnaround May Be In Sight (Realty Times, April 14, 2009)
“We’re past the rock bottom of the down cycle for real estate and now we’re moving into recovery mode.”
“Mortgage applications for purchases of resale and new homes were up again — eight percent for applications using conventional loans, and a remarkable 17 percent gain in applications to buy houses using low-downpayment FHA mortgages.”
“The report quoted Paula Hellenbrand, president of the Cape Coral Florida Association of Realtors, who predicted an end to inventory problems on the near horizon.”
Greenspan Sees ‘Seeds of a Bottoming’ in U.S. Housing (Bloomberg, May 12, 2009)
“ ‘We are finally beginning to see the seeds of a bottoming’ in the housing industry, Greenspan said today during a conference of the National Association of Realtors in Washington. The U.S. is ‘at the edge of a major liquidation’ in the stock of unsold properties, which may help to stabilize prices, Greenspan said.”
U.S. home market shows ‘encouraging’ signs (USA Today, July 24, 2009)
“Home sales rose for the third-consecutive month in June, a promising sign that stability in the housing market could help jump-start the economy.”
U.S. Economy: Home Prices Rise, Confidence Declines (Bloomberg, July 28, 2008)
“ ‘The fact that home prices may be finding some semblance of stability is good news that things are not likely to get worse,’ said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.”
Home prices show signs of stabilizing in May (AP, July 28, 2009)
“Home prices in May posted their first monthly increase since the summer of 2006, indicating prices are finally stabilizing, data Tuesday showed.”
“The Standard & Poor’s/Case-Shiller home price index of 20 major cities rose 0.5 percent from April, but was still 17.1 percent below May a year ago. “
U.S. housing starts keep recovery hopes alive (Reuters, August 18, 2009)
“ ‘The economy is recovering, this is the turning corner. We will have positive growth this quarter, but not a lot of strength. It very much looks like a U-shaped recovery rather than V-shaped,’ said Kurt Karl, head of economic research at Swiss Re in New York.”
Slowly but surely, economy shows signs of recovery (USA Today, August 28, 2009)
“…a nationwide phenomenon: signs of life in the battered housing market and the overall economy.”
“Housing prices rose 2.9% from the first quarter to the second — the first quarterly increase in three years”
Commercial Real Estate Recovery Second-Half 2010 according to Jones Lang LaSalle’s U.S. National Economic & Property Outlook (The Paramus Post, November 19, 2009)
“Commercial real estate markets across the nation already have experienced the steepest pace of declines for the majority of sectors and geographies.”
“While 2010 will be the year a global commercial real estate recovery begins, robust, broad-based growth is not expected until 2011.”
2010
Mortgage Trends Show Real Estate Stability (Wall Street Geek, January 20, 2010)
“The real estate market appears to be steadying based on mortgage activity trends”
In hard-hit markets, some see signs of bottom (MSNBC, January 29, 2010)
“ ‘The epicenter of the boom and bust will be the leaders of the recovery,’ said Lawrence Yun, chief economist for the National Association of Realtors. ‘Those three regions went through a big boom and a big bust and I think they overcorrected and are making solid gains compared to the rest of the country.’ He sites multiple bids on lower priced properties, prices beginning to stabilize and inventory levels coming down as evidence that the bottom is in sight.”
Housing Starts in U.S. Increased 2.8% in January, Permits Fell (Bloomberg, February 17, 2010)
“Housing starts in the U.S. rose in January to a higher level than anticipated, a sign that government support is helping to stabilize the real estate market.”
Home prices rise 0.3 percent in Dec. (The Washington Times, February 23, 2010)
“Home prices rose for the seventh straight month in December, a sign of price stability as the U.S. housing market continues its bumpy road to recovery.”
Warren Buffett sees housing market bouncing back by 2011 (USA Today, March 1, 2010)
“Billionaire Warren Buffett said the U.S. will recover from the residential real estate slump by 2011 as demand for houses catches up with the supply that accumulated during the bubble.”
Housing Real-Estate Recovery Signaled as Fed Unwinds (Update1) (Bloomberg, March 15, 2010)
“ ‘I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,’ said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts.”
Turnaround Coming for Real Estate? (Seeking Alpha, April 9, 2010)
“This also provides more confirmation that the real estate market has bottomed and may even be improving.”
“A year ago the prices of asset-backed securities such as these were priced to Armageddon—to the expectation of truly massive defaults nationwide. Now they are priced to merely difficult conditions, but that represents a huge improvement.”
Wasn’t commercial real estate supposed to crash? (CNNMoney, June 8, 2010)
“Peter Roberts, Chief Executive Officer of the Americas for property giant Jones Lang LaSalle believes commercial property values are in the process of bottoming out and will get to the ground floor by early 2011.”
Real estate market primed for turnaround (Savannah Now, December 30, 2010)
” ‘Once the current oversupply of inventory is absorbed, the real estate market should turn around very quickly,’ said Harvey Gilbert of Gilbert and Lattimore. ‘It’s really just a matter of when.’ “
2011
U.S. housing bottom seen in mid-2011: poll (Reuters, January 28, 2011)
“U.S. house prices are likely to continue to slide before bottoming out sometime in the middle of this year but will rise just over two percent in 2011 as a whole, according to economists polled by Reuters.”
“Asked when they see a bottom for U.S. house prices, 14 of 26 economists said they would trough in either the second or third quarter of 2011. Three saw the bottom coming as early as this quarter, while one did not see a bottom until the first three months of 2014.”
“Sales of U.S. new homes raced to their highest level in eight months in December, but gains were driven by a surge in the West. Even with last month’s gain, new-home sales are down 75 percent from their peak of 1.283 million-unit pace in 2005.”
Why the Housing Bottom Might Be Here (U.S. News, February 2, 2011)
“Yet home buyers are tiptoeing back into the market, amid an increasing number of signs that the fifth year of the housing bust might be the last.”
Will Real Estate Turn Around in 2011? (Outer Banks Market Report, March 2, 2011)
“a bottom is close”
“The OBX – a strong real estate market getting stronger in 2011?! The magic 8-ball seems to be pointing to yes.”
Monthly Housing Market Trends Point in a Positive Direction (Yahoo! News, June 14, 2011)
‘Home sales activity appears to be coming back in line with the seasonal trends we would expect to see this time of year,’ said RE/MAX CEO Margaret Kelly. ‘It’s a very good sign that prices are starting to rise on a monthly basis. This may indicate that we’ve turned the corner and are headed in a positive direction.’
Home Prices In U.S. Showed Signs Of Stabilizing (Bloomberg, August 30, 2011)
“Residential real estate prices in the U.S. decreased in the year ended in June at a slower pace than in the prior month, a sign the market may be stabilizing.”
“The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent from June 2010, after a 4.6 percent drop in the 12 months ended May that was the biggest since 2009, the group said today in New York. The median forecast of 31 economists surveyed by Bloomberg News projected a 4.6 percent decline.”
Housing market predictions for 2012 (CBS News, December 7, 2011)
“But in a surprising turnaround, Fannie Mae’s November National Housing Survey found that homeowners believe that their home value will rise 0.2 percent over the next year.”
“Looking forward, the biggest indication that the housing market might begin to normalize is that the number of homeowners who are seriously delinquent in their loan payments is shrinking.”
Is housing bouncing back? (The Washington Post, December 20, 2011)
“The deeply depressed housing sector finally seems to have found its bottom — and may even be starting to bounce back.”
2012
Has The Housing Market Hit Its Bottom? (Forbes, January 10, 2012)
“Wall Street firms have optimistically been betting that the bottom’s here. Research firms like Zelman & Associates predict the sector will pick up this year and hedge funds have been jumping into real estate-related investments from brick and mortar building purchases to shares of home builders stocks.”
Homeownership rates fall to 66% as downturn nears a bottom (USA Today, February 1, 2012)
“ ‘The trend is down, and there are few, if any, signs in the numbers that a turning point is close at hand,’ says David Blitzer, chairman of S&P’s index committee.”
Ready to Rebound (Barron’s, March 19, 2012)
“After falling 34% over the past six years, U.S. home prices will soon bottom.”
Has the Housing Market Finally Hit Bottom? (Time, April 27, 2012)
“The information superhighway is littered with the corpses of pundits who have erroneously called the ‘bottom’ of the real estate market, but hope springs eternal. This week produced two reports which have analysts optimistic that we’ve reached that point.”
Mortgage-Bond Bigwig Lewis Ranieri Calls Housing Bottom (U.S. News, May 7, 2012)
“The housing market has reached bottom, according to mortgage bond pioneer Lewis Ranieri, joining a growing chorus of other expert voices who say the long slog downward might finally be coming to an end.”
Report: Housing Market Recovery Has Officially Begun (TIME May 15, 2012)
“A new analysis suggests that home prices will begin to rise later this year.”
“The double-digit increases in U.S. housing prices over the first half of the past decade proved unsustainable. But the freefall is over. The point has been reached where housing prices will start to climb, albeit at single-digit rates in most markets over the next five years.”
“The Demand Institute’s report is one of the most comprehensive and substantive arguments we’ve seen yet that the housing market is nearing the light at the end of the tunnel.”
Housing starts add to recovery signs (Reuters, May 16, 2012)
“A rebound in groundbreaking for homes in April suggested the housing market recovery was gaining some traction, even though permits for future building fell.”
Buyer alert: Rising prices ahead (Boston.com, May 22, 2012)
“We are primed for a home price turnaround in Greater Boston and across Massachusetts.”
“That’s the verdict from Tim Warren, chief executive of The Warren Group, after the release this morning of home sales and price numbers for April by his Boston-based real estate data firm and publisher.”
April new-home sales increase 3.3%, pointing to recovery (Detroit Free Press, May 24, 2012)
“Americans bought more new homes last month, the latest evidence that the U.S. housing market could be starting to recover.”
“The gain pushed the annual sales pace to its second-highest level in two years. Economists were encouraged by the increase but cautioned that new homes are still selling at half the rate consistent with healthy markets.”
Real estate could be on the rebound (DelMaravnow May 27, 2012)
“the national market, which saw sale prices in April jump nearly 5 percent higher than the same month last year, the Commerce Department said Wednesday. The number of homes sold was up nearly 10 percent, too.”
Housing Market May Finally Be Turning Around With Sales Up 10 Percent In April (Huffington Post, May 28, 2012)
Housing Prices Show Signs of Stability (Wall Street Journal, May 29, 2012)
“Sinking prices have made a mockery of their exhortations, but the S&P/Case-Shiller index of home prices in 20 major cities is showing signs of stabilizing.”
“But if prices really are turning the corner, that has positive implications for banks’ and consumers’ balance sheets.”
U.S. Home Prices: Has the Tide Turned? (ABC News, May 29, 2012)
“Average home prices rose in March compared with February in most of the 20 cities in a Standard & Poor’s/Case Shiller survey out today – the first time in seven months there’s been a gain. This report adds to the growing evidence that the worst of the five-year housing slump appears to be over.”
Home prices at post-bubble lows but may point to market stability (LA Times, May 29, 2012)
“Home prices in the U.S. ended the first quarter at their lowest point since the housing crisis, with values in 20 major cities dropping 2.6% in March compared with the same period a year earlier.”
“Analysts believe the data could signal stability in the turbulent housing market, if not a nascent turnaround.”
The Housing Bottom Is Here (Business Insider, May 29, 2012)
“The headline sequential gain for the 20-city composite was just 0.09%, bit below the 0.2% that analysts had expected. But it’s obvious: Housing is bottoming.”
“As S&P’s David Blitzer said on CNBC today: Housing is ‘a whole lot better than the headlines'”
“The bottom line: Every single measure out there is showing gains price gains.”
S&P: Home Prices See New Bottom, Recovery On Deck (Reverse Mortgage Daily, May 29, 2012)
“The rate of decline has moderated, however, suggesting that a recovery is near.”
Did I miss any worthy of note? Let me know in comments and I will add them . . .
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