Where’s That Mythical Housing Bottom?
Mar 9th, 2009 | By Charles Delvalle | Category: Chart of the DayUnless we see a recovery in the housing market, we won’t really see a recovery in the economy. But is the housing market approaching a bottom? Or does it still have a ways to go?
The answer is critical to understanding the current economic depression.
This is a chart of the S&P/Case-Shiller Home Price Index.
As you can see, it’s plummeted over the last 18 months or so.
It shows that U.S. house prices have been spanked harder than a disrespectful 5 year old.
And, unfortunately, it shows no sign of bottoming anytime soon.
This makes sense considering the flood of foreclosures hitting the market.
In my parents’ neighborhood in Fort Lauderdale, Florida, homes that were selling for $250,000 during the peak are now going for $70,000 in foreclosure.
Repeat this scenario across the country, and you’ll see that home prices still have further to go.
Making matters worse is the 8.1% U.S. unemployment rate and the fact that nobody can find credit to buy a home with. (Less credit means fewer mortgages.)
As the year drags on and foreclosures keep hammering house prices, this trend will continue to drain cash from homebuilders.
That means homebuilders such Lennar Corporation (NYSE:LEN) should continue to see lower share prices as the year wears on.
Charles Delvalle is a self-taught market-timing professional and value analyst who's followed and invested in the market for the past ten years. He uses a unique combination of technical and fundamental research to pinpoint rapid profit opportunities with stocks and options.
Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering undervalued, cash-rich companies. He frequently mocks government stupidities and points out the "inaccuracies (or lies, take your pick) that government reporting frequently dispels as "truth".
