NODs stayed above 800 in every month from from 3/91 to 8/97. If we use NODs as a predictor, then we would stay out of real estate until 9/97, the month in which NODs went below 800 and stayed there (only one month, 3/98 was slightly above 800).
It looks like the median turns up in January 1996. However, two things we have to keep in mind about the median:
1) it lags by 12-18 months
2) on the way down, the median overstates the housing prices, and on the way up, it understates it I think.
I think at the trough, sales pick up on the low-end, as investors get back into the market, and first time home buyers once again start the chain of sales. Once the starter homes are sold, those starter home sellers can go and buy the mid-priced home, and those sellers can get their high end homes. So I’ve been saying that the increased activity of lower end homes at the trough, would actually make the median go down, even though the price of each indiviual home would be rising.
OFHEO data, which tracks the price of the SAME house, indicates that prices dropped from 1989 Q2 to 1995 Q2, rose from 1995 Q3 until 2004 Q3, and fell from 2004 Q4 on. Except for some minor zig zagging in 1992 – 1995, the price trends are fairly clear. I had discarded OFHEO data, bec. it only tracks homes with conforming mortgages, but the data shows they are accurate on the pricing trends. Although only a small percentage of San Diego homes are tracked with OFHEO, the price movement of those homes is accurately captured.
