With almost 25 million unemployed or underemployed and with consumer confidence feeble at best, what’s the significance of predicting a housing bottom? Will it mean that home prices have stabilized and that the housing crisis and recession are over? Does calling a bottom mean those who have been “fence-sitting” will be rushing out to write purchase agreements? We have to look no further than recent sales activity to see that consumers won’t be enticed into purchasing by pronouncements.
But some financial “experts” have recently stated that housing has finally reached its bottom, that the price declines we’ve seen during the past 5 years are officially over. Others dispute such claims, citing several reasons why housing will remain in the doldrums for the remainder of 2011. The end result is confusion among those who have homes to sell as well as those who may be considering purchasing a home. For those two groups, what’s the significance of predicting a housing bottom? In reality, there is none, not for buyers or sellers, and not for those of us who are just looking for improvement in the economy.
Predicting a market bottom is nothing more than speculation, a somewhat educated guess, but a guess nonetheless. In reality, it’s unimportant to predict the bottom in housing or any market, for consumers won’t be buying until they see real improvement in the economy; and for now, that seems almost an unreachable mirage.
The big problem is jobs; and while our “leaders” claim to be doing all they can to create jobs, their efforts have been fruitless. Not only are we not creating enough jobs to begin eating away at our incredibly high jobless rate, we’ve recently added more to the unemployment line. The loss of 7 million jobs during the recession added to the 8.6 million who have been forced to work part-time continues to slow the economy in ways not fully evident. Additionally, the number of people working part-time for economic reasons remains at the highest level in more than 50 years. That leaves more than 15 million people struggling to make ends meet; and their financial plight effectively removes them from the housing market—some of them forever.
Yes, we can call a housing bottom, and we can predict when home prices will stabilize. For those on Main Street, however, such exercises are meaningless. With an economy far from recovering from the worst recession in decades and teetering on the brink of another, predictions of stabilization may make for interesting headlines; but they’re only wishful thinking.
The reality of this economy is that a true recovery in housing cannot occur until we provide good jobs for those millions whose current focus is buying this week’s groceries.
Take a look at the graph from Calculated Risk to see how far we have to go in employment. 
The Housing Guru: The expert source for all your housing questions.
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