U.S. House Prices, S&P Case-Shiller Rolling Over?

By: Andrew_Butter

In May the S&P Case-Shiller Index started to tick upwards, plenty of people thought that was not going to last (Has the U.S. Housing Market Hit Bottom? ), yet it has edged upwards for three months now.

Looks as if it might be rolling over, comparing to the analysis I put out on 2nd August ( U.S. Housing Market Forecast, One Dead Cat Bounce and Two Sucker Rallies to Go? ).

The black & blue lines show up to May 2009, the dotted lines are forecasts, the red lines are updates.

Perhaps that might be dead cat bounce #1?

We will find out soon how much of that uptick was thanks to the $8,000 give-aways, which is going to stop soon, or if that was just King Canute holding back the tide for a moment.

Certainly the rate of final stage foreclosure isn’t slowing, averaging a pretty steady 75,000 a month, or so says Mark Hanson who is the most switched on analyst on the housing market in USA I have come across ( http://mhanson.com/archives/242 ), although the pipeline of Second Stage is still running at 140,000 a month, so water is building up behind the dam.

A key problem as was elegantly explained by Edward Harrison (http://seekingalpha.com/.. ) pointed out that because so many mortgages were securitized, and the servicers make more money (and have less headaches) if they foreclose than if they look for solutions, that’s not about to stop soon.

All in all everything looks pretty much on track for another drop soon.

And gimmicks like cash for clunkers or $8,000 handouts won’t stop the tide that by my reckoning is well on track for six million final state foreclosures by the time the whole thing is done (those are the ones when they kick you out on the street – there are three stages – it’s confusing).

There is an option which was laid out in Technicolor by Diane Thompson of The National Consumer Law Centre which looks the most coherent and sensible plan I’ve seen so far http://www.nclc.org/.. ).

But well, why fix things when you can run up the National Debt, hand out cash to banks at 0% interest so they can make money speculating the oil price up, and think of gimmicks?

What’s next…free tents?

By Andrew Butter

Andrew Butter is managing partner of ABMC, an investment advisory firm, based in Dubai ( hbutter@eim.ae ), that he setup in 1999, and is has been involved advising on large scale real estate investments, mainly in Dubai.

© 2009 Copyright Andrew Butter- All Rights Reserved
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