US Real Estate prices still falling !!

The history of US real estate shows that the house prices do not bottom until about 6 or 9 months after maximum mortgage defaults at the banks. Banks will ride the repossessed home for a few quarters and then realize that the asset is a dead asset on their books and then dump the asset from the balance sheet at 'fire sale prices' (accountants call it the 'big washout' or write off of bad and non performing loans).

The mortgage market is coming up to a 'crunch' period soon. 40% of the good credit-worthy people are now at risk because of recent unemployment. These were the "normal" people (not the subprime mortgages) that have lost their jobs and can't make payments. This group is a larger percentage of the population and they had bigger mortgages than the subprime.

My other indication is the contrarian view. A year and half ago the "new" rich but not savvy buyer was buying US homes. Recently, the "rich professionals" with cash flow (but also not savvy buyer) were buying. The market will bottom when the "old money" savvy business people will invest which might be later this year.

Why ??? Check this quote from a recent Lazard Asset Management report:

"Our research indicates that home prices could decline over 40% from the levels
observed at the end of 2008. This outlook is meaningfully more negative than most
current expectations. Significant declines in mortgage borrowing rates near the end
of 2008 may have decreased the downside in home prices somewhat, but our
analysis lends support to current efforts by government officials to intervene even
more forcefully in the mortgage markets."
-Ronald Temple, Managing Director, Lazard Asset Management
Emma Rasiel, PhD, Assistant Professor of the Practice of Economics, Duke University

more reasons:

1. Mortgage rates have increased during the last few weeks by almost one percent for 30 year fixed mortgages.
2. Nonfarm payroll employment fell by 345,000 in May.
3. The number of unemployed persons increased by 787,000 to 14.5 million in May.
4. The unemployment rate continues to rise, increasing from 8.9 to 9.4 percent.
5. Real gross domestic product decreased at an annual rate of 5.7 percent in the first quarter of 2009.
6. Many amateur / first time real estate investors are jumping in to the market. Last time I saw that was at the top of the market in 2005.
7. In California and Nevada, I've seen a significant number of houses receiving many multiple bids over the asking price. Last time I saw that, again, was at the top of the market in 2005. Maybe things are different this time, and it now means that real estate is bottoming, but I doubt it. - Stockerblog.com