When do house prices bottom?

[cowboy]

S&P released their Case-Shiller 20-city home price index today and prices appear to have ticked up in May. If the trend continues, then the quarterly bottom in the housing market will occur in Q2 instead of Q3 (missed it by that much.) When I started this thread, I posted in my blog that I thought national house prices would bottom somewhere between $160k and $170k. Looking at Shillers data here, I'm holding to that guess.

[Katy Lied]

Home sizes are larger, and interest rates are lower now than ever before. Ultimately, in my opinion, the real determinate of home value is the amount that people are willing to pay for a home relative to their monthly income. In this regard, interest rates play a huge role in home prices.

I'd be careful with the home size stat. Here in Salt Lake, home sizes are getting larger (maxing out in 2008) but lot size is getting smaller, representing a transfer of home resources from lot to building structure size. I'm not sure what kind of conclusion can be drawn from this about overall mortgage/home valuation.



This could also mean critical mass has been reached as far as SL County's buildout of available space.

[Indy Coug]

I'd be careful with the home size stat. Here in Salt Lake, home sizes are getting larger (maxing out in 2008) but lot size is getting smaller, representing a transfer of home resources from lot to building structure size. I'm not sure what kind of conclusion can be drawn from this about overall mortgage/home valuation.



This could also mean critical mass has been reached as far as SL County's buildout of available space.

Nice lot size shrinkage. Within 30 years, rowhomes will take over the US.

[Katy Lied]

Standing Inventory

New Housing Prices will not stabilize in Utah locally until builders work through standing inventory, which is down 40% from last year.



Internal research by Ivory Homes show that the peak number of builders in Utah was 719 in 2003. By the first quarter of 2009 only 20% were still extant. This will also help eat through excess inventory.

[creekster]

New Housing Prices will not stabilize in Utah locally until builders work through standing inventory, which is down 40% from last year.



Internal research by Ivory Homes show that the peak number of builders in Utah was 719 in 2003. By the first quarter of 2009 only 20% were still extant. This will also help eat through excess inventory.

Have you been stealing Ivory Homes' internal research AGAIN?!? Katy Lied and Stole.

[All-American]

stupid people that watch The OC and subsequently refer to Orange County as "The OC".

Yeah, don't call it that.

[cowboy]

I'd be careful with the home size stat. Here in Salt Lake, home sizes are getting larger (maxing out in 2008) but lot size is getting smaller, representing a transfer of home resources from lot to building structure size. I'm not sure what kind of conclusion can be drawn from this about overall mortgage/home valuation.



This could also mean critical mass has been reached as far as SL County's buildout of available space.

My original point was that comparing house prices year over year is not entirely accurate because house sizes are not the same. Your point, that lot sizes are changing, reinforces that the conclusion that year over year comparisons are not always reliable indicators of the nature of the market.

Lot sizes have shrunk by around 2,200 square feet while homes have increased by about 450 sf. Assuming a building cost of $110 per sf, lots would need to be valued at around $23/sf to make the trade-off an equal transfer.

The inventory data are really valuable. I looked for inventory data online once, but I couldn't find them.

[Katy Lied]

My original point was that comparing house prices year over year is not entirely accurate because house sizes are not the same.

okay. I still might try it, and just include a robustness measure.

The inventory data are really valuable. I looked for inventory data online once, but I couldn't find them.

New Reach does very good (and expensive) research. This table is available at The Utah Economic and Business Review, published by The Eccles School of Business. The current issue is on Utah Construction. Next month is more of the same.

http://www.bebr.utah.edu/Documents/u...EBR2009no1.pdf

[Katy Lied]

Have you been stealing Ivory Homes' internal research AGAIN?!? Katy Lied and Stole.

There's a brutal industry shakedown going on out there, monkey-boy.

[FMCoug]

Internal research by Ivory Homes show that the peak number of builders in Utah was 719 in 2003. By the first quarter of 2009 only 20% were still extant. This will also help eat through excess inventory.

That doesn't really change new home inventory though does it? It just moves the empty houses from the builder inventory column to the foreclosure column, no?

[creekster]

There's a brutal industry shakedown going on out there, monkey-boy.

SOUnds like somthing Michael Milken woudl say: It was tough out there, so we HAD to steal!

I am grateful every day that I had the good fortune of choosing a prfoession with some ETHICS!

[Katy Lied]

That doesn't really change new home inventory though does it? It just moves the empty houses from the builder inventory column to the foreclosure column, no?

Not so much eat through excess inventory; more like not create additional excess inventory.

[Katy Lied]

SOUnds like somthing Michael Milken woudl say: It was tough out there, so we HAD to steal!

I only know Michael Milken 2.0: The devout, bald, generous benefactor and community donor.

[byu71]

We have decided to start buying some Real Estate in Vegas. Since I am a good contrarian indicator, we probably haven't bottomed yet.

[TripletDaddy]

We have decided to start buying some Real Estate in Vegas. Since I am a good contrarian indicator, we probably haven't bottomed yet.

I only buy when Venomous Viper tells me to buy. In fact, I think I might go to one of his upcoming seminars...