We're Now Getting the Calls for a Housing Bottom

This is the next stage of an asset collapse, the declaration that a bottom has been found, and it has no where to go but up now.

First, we have an OP/ED in the Wall Street Journal declaring the housing crisis to be over. This is suspect for two reasons:

1. It's made by Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York, and he has a financial interest in all this fixing itself.
2. It's a Wall Street Journal OP/ED

Additionally, the logic is just plain silly. He claims, among other things, that low interest rates will have housing bottom out, even while there are increasing inflationary and interest rates pressure.

He also believes that since the inventory is not at 11 months, near historic highs, it will turn around.

He could be dishonest, or he could be an idiot, but my money is on both.

I also think that he does not understand how much Alan "Bubbles" Greenspan distorted the market during his tenure as Fed Chair.

We are also seeing some bargain hunting in the financial markets, but again, we saw that, and the declaration of a number of times during the dotcom crash.

To put it bluntly the market is a fool some times.

Of more significance are reports like this, where we see those neighborhoods hit earliest hardest are seeing an up tick. Is this because they are cannibalizing from other neighborhoods that people perceive as still being on the way down?

I agree with the Rich Toscano, when he suggests:

So what does it all mean? One really helpful puzzle piece was supplied by SD Realtor a couple weeks back. He posted some data showing that while volume has declined in many higher end areas, it is actually up quite substantially in some of the areas that have really been crushed (e.g. Eastlake).

His conclusion was that the price declines have gotten so bad in some areas that buyers are starting to creep back in. But where the prices have been stickier, demand remains quite weak. This is a sensible analysis and I tend to agree. If this is what's going on, and volume is still the good leading indicator it once was, those hard-hit areas are likely closer to the bottom than the rest of San Diego.

There's one other twist to the question. The months of inventory figure has declined, but that measures sales against "want to sell" inventory. What's arguably more important is the number of sales vs. "must sell" inventory. It could well be that even as the total amount of inventory declines, must-sell inventory is steady or even rising. I attempt to proxy this relationship with my sales-per-notice-of-default charts. Perhaps the next update of that chart will fill in some blanks, but given that we've just been at or near all time high default levels and that defaults generally represent future must-sell inventory, it doesn't seem like there is a real danger that must-sell inventory will decline much any time soon.

Banks are still foreclosing, and the numbers are continuing to increase, and that is the data which we should consider.