Jim Cramer's "Shameful" Housing Bottom Call

By
Real Estate Broker/Owner

To use Jim Cramer's own words, Cramer's housing bottom call today is "shameful".

He has no idea what is going on out there.

Jim Cramer is being an academic, something he accused Ben Bernanke of nearly two year ago.

This is a different kind of market, Cramer.  It is not just about stabilizing demand, it is about the relationship of demand relative to the supply of housing, also known as the month's supply of housing.  As long as foreclosures continue to flood the market and demand remains weak, home values will erode as they have been for the past 2.5 years.

Cramer's call for a housing bottom, which he defines as, "What does a bottom look like? It's the combination of ramping sales, and sales in certain areas are up ten times those of last year, and an end to falling prices."  As Cramer likes to do, he often overlooks the factsAccording to the NAR, 44 out 50 states saw declines in home sales from the 1Q08 to the 1Q09.

Unfortunately for Cramer, what he and many others fail to recognize is that the excess supply of homes, which is responsible for driving down home values, continues to plague the housing market.  I have made the case before that due to recent foreclosure moratoriums, shadow inventory, rising mortgage delinquency rates (a record 12.07% of all mortgages are 30 days late), and massive job losses (most economists agree that there is a correlation between job losses and foreclosures), we are only in the eye of the storm right now in terms of foreclosures and escalated levels of housing inventory.  This housing depression still has another two to three years to run its course.

The real unemployment rate has surged to 16.4%.

Credit card defaults just set a record in May.

According to the MBA a record 12.07% of all mortgages are 30 days late.

And Cramer wants us to believe that we are not going to see a new sea of foreclosures drive down home values?

 

 

 

 

Comments (6)

Heather the Realtor Orlando, Lake Mary
LemonTree Realty - Orlando, FL
First Time Home Buyers, Bank Owned Homes

It's all hype to keep people buying through the summer months, regardless of what market we are in tehse are the good months so they try to make them sound better while hiding what is coming.  It's still a good time to buy but it's not the bottom

Jun 16, 2009 01:18 PM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

That's strange Mark. I just made the call today that this is not the bottom. We'll see who is right.

Jun 16, 2009 01:24 PM
Konnie Mac McCarthy
MacNificent Properties, LLC - Cobb Island, MD
Broker/Owner - VA & MD "Time To Get A Move On!"

I just love it when people who are experts in their field, think they know what is going on in another... :) he should probably stick to what he knows.

Jun 16, 2009 02:35 PM
Jim Crawford
Maximum One Executive REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

I don't think the bottom is in sight yet.

Jun 16, 2009 03:44 PM
Aaron Catt
Silvercreek Realty - Boise, ID
Boise Real Estate

Boy, I'm gonna throw my cards out here and admit that I don't know who Jim Cramer is...

Who is he?

Jul 17, 2009 05:13 PM
Mark MacKenzie
Phoenix, AZ

Aaron:  He is a "stock-picker" on CNBC.  Has written some books and gets way too much airtime for a guy that has made some reckless calls.

Jul 18, 2009 01:24 AM