Greenspan opened up his mouth again and told the world that the U.S. is nearing a bottom for the real estate market. Those who remember back to 2006, might remember that Greenspan made another market bottom call, and he turned out to be horribly mistaken. In both accounts his statements were backed by the National Association of Realtors (NAR) who offer up all sorts of real estate data. Investors can't listen to anything that NAR says, for obvious reasons, and history shows us that we should give much more weight to what comes out of the former Fed chief's mouth either. For more on this, read the following blog post from Tim Iacono.
Should anyone be surprised that former Fed chairman Alan Greenspan reaffirmed his "early-2009" housing market bottom call yesterday before the National Association of Realtors?
Former Federal Reserve Chairman Alan Greenspan said that the decline in the U.S. housing market may be bottoming and it’s “very easy to see” financial markets continuing to improve.At "the edge of a major liquidation"? What newspapers has he been reading? The headline in my newspaper today says "Foreclosure filings hit record for second month".
“We are finally beginning to see the seeds of a bottoming” in the housing industry, Greenspan said today during a conference of the National Association of Realtors in Washington. The U.S. is “at the edge of a major liquidation” in the stock of unsold properties, which may help to stabilize prices, Greenspan said.
Back to the Bloomberg story:
While the housing bottom may not be obvious in prices, it is becoming clear in “significant regional differences,” where some of the hardest-hit areas are starting to show signs of improvement, he said.While it is certainly true that, in some of the hardest hit areas, home prices just can't go much lower (think Detroit), there are lots of other areas where the descent is ongoing and moving up the socio-economic ladder as Option-ARMs and Alt-A loans sour in record numbers.
Ironically, the realtors' trade group had reported earlier in the day that home prices had just declined by a record amount during the first quarter.
A quick search on housing market predictions during 2008 shows that the former "Maestro" made a few very public calls for a housing market bottom in early-2009, so you'd have to think that, with six weeks left to go, the odds are working against him at the moment.
Despite all the recent cheerleading, it is doubtful that the "seeds" of a bottoming in housing that are now seen will turn into the required "green shoots" in the near-term.
Interestingly, when the NAR joined forces with the former Fed chairman back in November of 2006, this is what they produced:
The advice DON'T DELAY was offered two and a half years ago.Wow! Homebuyers who heeded these words back then would be down about 30 percent today, according to the latest data from the Case-Shiller Home Price Index.
This post can also be viewed on themessthatgreenspanmade.blogspot.com.