Will Housing Bottom In 2009?

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They say the housing market is at the epicenter of the current financial crisis, right? And they say it’s always darkest before the dawn…

With that said - two new reports on home sales paint a pretty bleak picture.

Existing Home Sales

Existing homes aren’t moving. If you drive around the neighborhood chances are you see a whole lot of “for sale” signs. People are simply too afraid of the economy to buy a house.

So it probably comes as no surprise that the National Association of Realtors says existing home sales dropped in November, declining 8.6 percent.

But you might find it surprising to learn that those numbers signal the worst decline in nearly a generation. And chances are, as a result, you’re a little poorer because too much supply on the market drives down price.

The median existing-home price slid to $181,300 in November, down 13.2% from November 2007, when the median was $208,800.

New Home Sales

And those brand spanking new homes aren't selling any better. In a separate report, the Commerce Department says sales of new homes dropped 2.9 percent in November.

Like we said above – the two reports paint a pretty bleak picture. But is this the edge of night?

Going Forward

“The homebuilder stocks are a great proxy for people making early bets on the return of the economy,” says Deutsche Bank analyst Nishu Sood. “At some point they should rally ahead of the broad market.”

When will you know it’s time to get long?

Sood recommends keeping an eye on new home sales data. “Those numbers are going to be the most leading indicator. So when that number begins to stabilize you can have some confidence that things could turn around.”

Should you play housing now?

“I’d watch and wait,” counsels Sood . “(The turnaround) could be a second half of 2009 event.”


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