The Real Deal Miami

U.S. housing will bottom in March, analyst says

February 06, 2012 03:00PM

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Price-to-Rent ratio (source: Calculated Risk)

Calculated Risk has pegged this March as the bottom of the market  for U.S. home prices.

The blog isolated home prices from another data set that’s commonly used to determine market strength, new home sales and housing starts, and predicted that both the Case-Shiller Index and the CoreLogic index would valley in March.

(The indices use data from several months prior, so their forthcoming March releases actually correspond to current conditions.)

Evidence to support this claim comes from the price-to-rent ratio and the real price of homes (that is, prices adjusted for inflation), which have both reverted to normal historical levels after ballooning in the mid-2000s. Further, the large decline in listing inventory and policies that ease the price pressure from distressed sales will bring the price free-fall to a stop. But prices won’t necessarily begin to rise significantly, as they tend to move sideways for years after a bust, Calculated Risk said.

The prediction covers U.S. housing prices, but the blog noted that areas with an especially large backlog of foreclosures would likely not be in the clear for months. [Calculated Risk]

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