May Case-Shiller Numbers: Is the Worst Over?
It’s tough to make predictions, especially about the future.
—Yogi Berra
If I told you a stock that had been selling for $30 three years ago was now $20, and hadn’t fallen any further in the last few months, could you confidently say that it had bottomed?
It would all depend, you’d say.
On the company’s business prospects, competitive posture, service and product line(s), etc. Plus, the performance of the broader economy.
That’s how I feel about forecasting housing prices from here.
Except that the applicable variables are things like (un)employment, GDP growth, interest rates, etc.
Tankers vs. Speed Boats
So, is it the bottom??
Consider this joke about CPA’s:
When asked the color of a horse standing in a pasture, the CPA answered, “this side appears to be brown.”
In that spirit, I’m prepared to say that, for now, the housing market appears to have bottomed.
P.S.: the best argument I’m aware of in favor of a housing bottom is that, unlike stocks, housing market cycles tend to be big, slow-turning affairs with lots of inertia. Think of it as tankers vs. speed boats.
