>> Housing Bottom Coming in 2015?

Housing Market Bottom Predictions
There have been a few predictions on the housing market bottom: 2009, 2010, & 2012?


Dallas Fed Housing Market Bottom Prediction: 2015 with further 33% price drop?
The Dallas Federal Reserve recently came out with an interesting report recently on the path to a healthy housing market. Some interesting excerpts:

• Public policy goal of increasing the U.S. homeownership rate collided with a huge leap in financial innovation.
• 9.1 million homes were built between 2002 and 2006, a period when 5.6 million U.S. households were formed.
• Real home prices rose 85% to their highest level in August 2006. They have since declined 33 percent.
• Mean reversion: home prices still must fall 23% if they are to revert to their long-term mean; chart below:

Other Observations & Implications from the Economic Letter

• In 2008, 33% homeowners devoted at least a third of household income to housing; 12.5% were burdened with housing costs of 50 percent or more
• in a best-case outcome, 20 to 25 percent of modifications will become permanent. Failed modifications suggest that, without strong income growth, the bounds of affordability can be stretched only so far.

A final note:

With nearly half of total bank assets backed by real estate, both homeowners on the cusp of negative equity and the banking system as a whole remain concerned amid the resumption of home price declines.

Continue reading the economic letter here