http://www.fieldcheckgroup.com/2009/06/04/6-5-beware-real-estate-false-bottoms/

6-5 Beware Real Estate False Bottoms
Thursday, June 4th, 2009 | By Mr. Mortgage
The Age of False-Bottoms in Real Estate is Here
The Anatomy of a Housing Market at a Potential False Bottom

I do a significant amount of work for distressed funds and thought this research would be interesting to share. This is only the San Diego MSA but most other MSA’s in the state look very similar. Mark

I was on CNBC several weeks back with Erin Burnett and she asked if there was any chance for the Case-Shiller to suddenly spike one month in the near-term. I said ‘no major spike — but there absolutely will be price leveling and even rising in some the hardest hit MSA’s’. It’s time to revisit this.
In my April 30th report entitled ‘Housing (bottom) Update’ I highlighted the reasons why some of the hardest hit MSA’s might do well over the near-to-mid term:

artificially depressed supply through gov’t and bank-specific foreclosure moratoria;
artificially low rates and temporary tax benefit;
foreclosure mix-shift creating an artificial skew higher in reported
median and average prices;
And fleeting seasonal demand.
Essentially, everything is artificial and so should the bottom that comes out of it. I have been looking for this false bottom phenomenon to play out bottom for months and believe it is here.
The San Diego MSA is a perfect example of a market experiencing a false bottom. It is a very interesting and unique market that I believe will show a bottom in reported house prices as soon as the next Case Shiller report. It may even report a decent sized increase in median and average house prices.
San Diego MSA – The Anatomy of a False Bottom
San Diego is not unlike most other hard hit MSA’s. Prices are down significantly, sales have increased year-over-year creating excitement and speculation, and the majority of the sales are happening at the low end. The mid-to-upper end is languishing. For various artificial and temporary reasons, there is only a couple of months supply at the low and literally ‘years’ of supply at the high.
San Diego total sales are hovering around 3k per month. This is up sharply from the lows of 18-months ago when prices were still near the highs and all of the exotic loans went away suddenly creating a sudden and violent sales trough.
But sales are nowhere near robust in a historical context especially when considering that median house prices are down 44% from the peak and rates are at historic lows. If this market was truly on the mend, sales would be much higher especially now, during the peak season. Sales actually dropped 10% from April to May.
Some will argue that low sales reflect low inventory, which I do not necessarily agree with. But, if that is the case we should see a price surge in the near-term that proves it.

6-5 Beware Real Estate False Bottoms

Thursday, June 4th, 2009 | By Mr. Mortgage
The Age of False-Bottoms in Real Estate is Here
The Anatomy of a Housing Market at a Potential False Bottom

I do a significant amount of work for distressed funds and thought this research would be interesting to share. This is only the San Diego MSA but most other MSA’s in the state look very similar. Mark

I was on CNBC several weeks back with Erin Burnett and she asked if there was any chance for the Case-Shiller to suddenly spike one month in the near-term. I said ‘no major spike — but there absolutely will be price leveling and even rising in some the hardest hit MSA’s’. It’s time to revisit this.
In my April 30th report entitled ‘Housing (bottom) Update’ I highlighted the reasons why some of the hardest hit MSA’s might do well over the near-to-mid term:

artificially depressed supply through gov’t and bank-specific foreclosure moratoria;
artificially low rates and temporary tax benefit;
foreclosure mix-shift creating an artificial skew higher in reported
median and average prices;
And fleeting seasonal demand.
Essentially, everything is artificial and so should the bottom that comes out of it. I have been looking for this false bottom phenomenon to play out bottom for months and believe it is here.
The San Diego MSA is a perfect example of a market experiencing a false bottom. It is a very interesting and unique market that I believe will show a bottom in reported house prices as soon as the next Case Shiller report. It may even report a decent sized increase in median and average house prices.
San Diego MSA – The Anatomy of a False Bottom
San Diego is not unlike most other hard hit MSA’s. Prices are down significantly, sales have increased year-over-year creating excitement and speculation, and the majority of the sales are happening at the low end. The mid-to-upper end is languishing. For various artificial and temporary reasons, there is only a couple of months supply at the low and literally ‘years’ of supply at the high.
San Diego total sales are hovering around 3k per month. This is up sharply from the lows of 18-months ago when prices were still near the highs and all of the exotic loans went away suddenly creating a sudden and violent sales trough.
But sales are nowhere near robust in a historical context especially when considering that median house prices are down 44% from the peak and rates are at historic lows. If this market was truly on the mend, sales would be much higher especially now, during the peak season. Sales actually dropped 10% from April to May.
Some will argue that low sales reflect low inventory, which I do not necessarily agree with. But, if that is the case we should see a price surge in the near-term that proves it.

to read more:
Link:
http://www.fieldcheckgroup.com/2009/06/04/6-5-beware-real-estate-false-bottoms/