Jim Cramer's Housing Bottom Call??

By
Real Estate Broker/Owner

"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 thisExisting 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.

 

 

Comments (8)

Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

The only thing Jim Cramer knows is how to speak....I think he's been wrong on everything in the past few years.

Jun 04, 2009 03:41 AM
Richmond Virginia
Richmond, VA

I think Cramer is...well...entertaining.  The big picture is... he's part of media cycle which is feeding the general public all kinds of opinions.  Everyone has a spin and overall folks are just confused.

I'm hoping that the tax credit will not be extended and prospective buyers will have use it or lose it. I can't tell people that we're at THE bottom...but I can say that in my opinion that it's a good time to buy.  There are deals to be found and resources to use...now.

Jun 04, 2009 03:48 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Mark - First and foremost, I want to say that I just started reading your book.  While I completely agree on so much of it, I'm seeing some disturbing trends in my local market that perhaps you may not have predicted or if you did, you chose not to write about it.

While you mention that CA is showing some signs of price stability, are you aware of why that is or what is driving it.  I have my opinions but would be curious to know what you think because you are definitely much more informed than me.  My opinion is just based on some of the numbers that I'm seeing in my local market here in Los Angeles and Ventura counties.

Jun 04, 2009 04:58 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Mark, what few seem to realize is that many homeowners have created such a tremendous debt load that they will never be able to dig themselves out.  It has been predicted that as many as 75% of the modified loans will default because the homeowners simply cannot make their payments. Whether the loan principle and payments are reduced or not doesn't matter. The massive debt won't allow them to maintain their payments, reduced or otherwise. Then, we'll just have more foreclosures to deal with.

Jun 04, 2009 05:01 AM
Anonymous
jb

jim spins so much im getting dizzy!  unbelievable !

Jun 04, 2009 11:17 AM
#5
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Mark, I wish I could say you are wrong but you are using too much common sense and facts. Our market is a lot busier this year than it was last year, so there are more buyers but prices are still declining and will until we work through all the foreclosures and short sales and that could take us into 2011 or beyond.

Sharon

Jun 04, 2009 03:33 PM
Mark MacKenzie
Phoenix, AZ

Karen:  Cramer called a housing bottom for June of 2009 several months ago, he hasn't backed down on this claim.  He also has yet to make a strong case for his claim.

Tim:  You make a REALLY good point about the tax credit.  I do see your point.  I am not convinced that it has actually brought in buyers to the market, because the data does not support this.

Donne:  Thank you so much for investing in the book, I hope that it provides some good insight.  What I have seen is that the only reason demand is up in CA is because of foreclosure prices.  These prices are in turn having an unintended impact on other homeowners.  Falling home values are not a "housing stimulus".

John:  I agree completely.  Loan modifications are another reason why I consider us to be in the eye of the storm of this housing depression.

JB:  Indeed. :)

 

Jun 04, 2009 03:35 PM
Jim Crawford
Maximum One Executive REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

There is no business like show business.  I do not think we are anywhere near a bottom yet.  The banks have refused to jettison their toxic assets, foreclosures are still rising.

Jun 05, 2009 01:54 AM