"Yeah, it's here." Says CNBC's Jim Cramer as he calls a "bottom" to the housing markets despite home values plunging a near record -15.4% in April while there is still a 10.2 month supply of housing despite massive foreclosure moratoriums (Source: NAR).
Citing low, but rising, interest rates, the $8,000 first time home buyer tax credit, and record housing affordability, Jim Cramer is calling a "bottom" to the housing market. But what Cramer is overlooking is that despite all of these "buying signs" and housing stimulus, home sales are still bouncing along multi-year lows. Demand for real estate on a seasonally-adjusted basis has not been impacted by any of this. Existing home sales are still off by -3.5% from last year and new home sales are off by -34% from last year.
Cramer goes on to say, "You're gonna crush the inventory." But by most reasonable estimates, inventory is actually going to surge during the second half of the year. In fact, just recently the Mortgage Bankers Association published a report that a record 12.07% of mortgages are now at least 30 days late. I have made the argument before that we are only in the eye of the storm in terms of foreclosures and that it is entirely probable that this storm will carry through until 2011 and possibly 2012.
My two favorite sound bites from Cramer's interview are, "These numbers are definitive." and "This is patently obvious." The only thing that is patently obvious is that based on the current and ongoing supply and demand imbalance, combined with surging unemployment, is that the national housing market is no where near a bottom. In fact, the only markets that are finally showing a degree of price stability moving forward are CA, AZ, and NV. Home sales are down in 44 out of 50 states and 90% of metros lost value year over year according to the NAR.