With Case-Shiller reporting its monthly numbers yesterday (CS 140.86) we decided to do a follow up to our recent housing report: https://caldaro.wordpress.com/2011/01/24/us-housing-into-the-2020s/. In the report we noted the following:
We anticipate that the housing market will remain under pressure from 2006 – 2015 or so. Typically these types of declines take about one decade to complete. On the downside we are not expecting much more of a decline. Possibly into the 130′s area over the next few years, with an outside chance of hitting the 1989 high around 125. This would represent a total decline between 33% and 38%. Housing has already declined 30%. Once the bottom occurs we would expect a multi-year rally and then a retest of the lows, somewhat similar to the 1932-1942 and 1975-1985 periods. The second bottom should occur by the mid-2020′s. Then a new bull market in US housing should get underway.
After a sharp 32.6% decline from CS 207 in July 2006 to CS 139 in April 2009, the US real estate market made its first major low and started a counter-trend rally. This rally lasted until July 2010 when the index hit CS 149: +6.9% rebound. Since then, however, prices in the housing market have been drifting lower, and they just confirmed another long term downtrend. If we count the first decline (Jly06-Apr09) as wave A, and the counter rally (Apr09-Jly10) as wave B, then we are now in wave C of the housing bear market. As noted above, we’re not expecting a substantial decline: Possibly into the 130′s area over the next few years, with an outside chance of hitting the 1989 high around 125. Nevertheless, the housing market should remain soft going forward.