Tuesday, May 29, 2012

House Prices: From "bold call" to consensus in four months

by Bill McBride on 5/29/2012 03:53:00 PM

Less than four months ago, I wrote The Housing Bottom is Here and I pointed out that the house price data had a significant lag so we had to look at other data for clues. The post title refers to the many emails I received back in February: "bold call", "gutsy call", "you are insane" ... and many more.

I could still be wrong, but it sounds like Robert Shiller and Karl Case are coming around to a similar view. Here are couple of quotes from a CNBC interview this morning (video below):

Karl Case: “We lag of course – January, February and March moving average – and so we lag, and the indicators for the last three or four months on the quantity side have been real positive. We look like a bottom. You have to pick to find real negatives.”

CR: As I've noted before, this is just a possible bottom for nominal prices (not adjusted for inflation). We could see further real price declines, as Professor Shiller noted:

Robert Shiller on CNBC: "[The futures] go out to 2014. It is projecting something like 2% or 3% per year [increase], which by the way, is just the inflation rate. If you correct for the inflation rate, they [futures] are predicting no action."

Earlier on house prices:
Case Shiller: House Prices fall to new post-bubble lows in March NSA
Real House Prices and Price-to-Rent Ratio at late '90s Levels

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