Continued Housing Difficulties

Implications: The housing bust is not over and trends continue to be negative.  The only positive activity is that homebuilding stocks have gone up, without a good reason.  We still have a ways to go to work through all this.

Analysis: Continued Housing Difficulties

This article suggests housing is starting to stabilize.  This seems premature for a number of reasons:  foreclosures continue to add to the existing inventory of unsold homes,  auctions of new homes continue to apply downward pressure on home prices for the overall market, financial institutions are desperately attempting to move through their foreclosures, a number of real estate joint ventures are on life support, land bankers are trying to dispose of land and other real estate assets, there is no public confidence in housing or the overall economy, the mortgage market continues to be very difficult, recent and upcoming bankruptcies by homebuilding companies and lenders place added pressure on the market, etc.

In short, the news isn't good and there are a large variety of downward mitigants that suggest the housing market has not hit bottom.  This time around there are more and greater external factors causing the recovery to be delayed such as economy, mortgage difficulties, foreclosures, bankruptcies, etc.  These events have a large role in the continued downturn and are becoming increasing difficult to deal with.  All of this is illustrated by the poor sales results in the first calendar quarter and the fact sales backlogs starting the second quarter are often half of what they were a year ago.  This means greatly reduced revenues and additional losses due to the inability to reduce overhead to match up with the much smaller revenues.

In summary, the recovery has no started and it likely will not occur until well into 2009, if then.