Ever since the data made it obvious — at least to us — that Housing was topping out in 2006, we have watched with various degrees of bemusement the annual ritual that is the erroneous housing bottom call.

Many casual observers of Housing (along with a few pros) fail to understand the difference between monthly seasonality and actual improvement. This first came up in March 2008, when the WSJ screwed the pooch on February 2008 existing home sales, incorrectly reported Wave of Foreclosures Drives Prices Lower, Lures Buyers. Actual EHS were down 23.8% year over year. The Journal was suckered by how the NAR spinmeisters shaped the narrative, emphasizing monthly data (at least from March to September).

These bad calls reoccur every Spring, as the data begins its annual improvement. I use the phrase Perennially Wrong Bottom Callers and its acronym PWBC™ (I may have to trademark that!).

This year, the unusually mild Winter threw the perennially wrong bottom callers into a tizzy. The January and February data gave them the early false belief that the bottom was here. Subsequent data demonstrated that it wasn’t.

Exactly how often have the PWBCs been making their really really bad housing bottom calls? As is often the case with equities, from the peak of the market all the way down. Searching for terms like “Bottom, turnaround stability recovery” along with “Real Estate Housing Homes Residential” reveals a broad and deep reservoir of PWBCs.

Spring has sprung, and the usual suspects are up to their old tricks. There are so many bad PWBC that it is really difficult to make special mention of anyone, but we are compelled to point out two PWBC in particular: Alan Greenspan, who was wrong early and often, and the National Association of Realtors, whose spin has been astoundingly consistent, bullish and wrong, the whole way down.

To help keep all of the bottom callers honest, what follows below is a chronological listing of articles and commentary (with links) over the past 7 years showing many of the bottom calls since 2006. Someone with Lexis/Nexis and more time than I should make this into a legitimate study.



Housing Turnaround? Home Sales Up in March (ABC News, April 25, 2006)

Home builders see bottom of housing slump (CNN, December 5, 2006)

New home sales: Back from the dead? (CNN, December 27, 2006)

Read Between All Those For-Sale Signs (NYT, August 27, 2006)

“the latest housing numbers seem like they could be a turning point.”

“Perhaps the biggest reason to be skeptical about a real estate crash is that the country has not really suffered through one before”

New Signs of Cooling in Housing (NYT, August 24, 2006)

“While prices are sliding, most economists are still predicting that they will not fall very far.”

NAR’s Existing Home Sales & Prices (TBP, November 2006)

Greenspan Says `Worst’ May Be Past in U.S. Housing (Bloomberg, October 6, 2006)

“Fed Vice Chairman Donald Kohn, a former top adviser to Greenspan, also said this week that while he doesn’t know how long and deep the housing slump will be, it probably won’t sink the U.S. economy into a recession.”

“Former Federal Reserve Chairman Alan Greenspan said the ‘worst may well be over’ for the U.S. housing industry”

Home builders see bottom of housing slump (CNN, December 5, 2006)

“The year-long slump in the housing market may be near a bottom, say home builders”

New home sales: Back from the dead? (CNN, December 27, 2006)

“David Seiders, the chief economist with the National Association of Home Builders, agreed that the supply of homes on the market is still too high to say that the report signaled a recovery, yet he’s encouraged by the solid sales pace in this report. ‘What I’ve been looking for is stabilization, that’s what I’m reading from this,’ he said’”


U.S. Realtors see gradual existing-home sales rise (Reuters, February 7, 2007)

“U.S. existing-home sales have likely hit bottom and should gradually rise this year”

IMF believes US housing market may bottom out (Reuters, April 11, 2007)

“The IMF’s forecast for another year of strong growth, with some risks, is based on the notion that the U.S. housing market will bottom out and a slowdown in U.S. capital spending will be reversed, a senior IMF official said on Wednesday.”

Housing Market Nears Bottom (Forbes, May 25, 2007)

“The housing market is about to hit bottom.”

Hovnanian Chief Says Housing Bottom Is `Very Near’ (Update6) (Bloomberg, September 14, 2007)

“Hovnanian Enterprises Inc. Chief Executive Officer Ara Hovnanian said the U.S. housing market is near the bottom”

Housing Predictor Reports U.S. Real Estate Turnaround (RISMedia, May 22, 2007)

“More than half of the nation’s housing markets are appreciating or have at least stabilized, according to a special report by Housing Predictor”

“Housing Predictor expects foreclosures to continue to increase throughout the remainder of the year, and level off toward the end of 2007 as more investors purchase properties.”

Sales & Volume Begin to Flatten Out! (Peterson Realty April 2, 2007)

“Barnstable County Register of Deeds, John F. Meade, reports that the volume of real estate sales in March 2007 was down 1.1% from March 2006 volume and the total value of sales was down 1.25% from the previous year.”

Whoops! Another 2009 turnaround estimate (Arizona Real Estate Notebook, July 25, 2007)

“Although it is for the new home market, RL Brown’s new estimate is the market won’t turn around until 2009.”

“Brown expects the market to remain at the same level in 2008 before beginning its rebound in 2009.”

Real Estate Outlook: Will Housing Turn Around? (Realty Times, December 31, 2007)

“outlook from Dr. Lawrence Yun, chief economist of the National Association of Realtors: ‘The broad trend over the coming year will be gradual rise in existing home sales, but because sales are exceptionally low for the final months of 2007, total sales for 2008 will only be modestly higher than for 2007.’”

“Dr. David Seiders, chief economist of the National Association of Home Builders, had this to say: Our ‘housing forecast shows systematic improvements in home sales by the second quarter of 2008′”


NAR Housing Market “Bottoms” (TBP, January 2008)

Florida Real Estate Market Reached Bottom in 2007; Market Expected to Recover from ‘Indigestion’ (Reuters, January 7, 2008)

‘The market has some indigestion now, but housing markets will return to normal during the next few years’

U.S. Home Sales to Reach Bottom in 2008, Bankers Say (Update3) (Bloomberg, January 14, 2008)

“U.S. existing home sales will reach a bottom in 2008”

Zell Sees Start of Housing Recovery in the Spring (CNBC, February 26, 2008)

“The US economy will avoid recession as the housing market begins to recover this spring, according to billionaire investor Sam Zell.”

WSJ Confuses Seasonality with Recovery: How Counter-Productive is Realtor Association Spin? (TBP March 25th, 2008)

Wave of Foreclosures Drives Prices Lower, Lures Buyers (WSJ March 25, 2008)

Existing Home Sales, Non Seasonally Adjusted, Explained (TBP, March 25th, 2008)

Bottom’s Up: This Real-Estate Rout May Be Short-Lived (Barron’s, July 14, 2008)

“This real-estate rout has been more painful than prior ones, but it may be shorter-lived. Indeed, there are early signs of recovery.”

“Yet, such pessimism appears overdone, based on much recent data. Sales of existing homes are showing tentative signs of increasing, while the plunge in prices likely is nearing an end”

“Still other numbers suggest prices are close to bottoming.”

“‘Every time this has happened before, housing-market activity has rebounded within a quarter and caught experts by surprise,’ Chip Case says.”

“Jim Paulsen, chief investment strategist of Wells Fargo’s primary investment unit, expects home prices to steady by year end, with the pace of foreclosures slackening shortly.”

“the available data suggest the scary dive in home prices soon will be over.”

Cramer Calls the Housing Bottom (CNBC, August 27, 2008)

“The economy will never recover if housing doesn’t find its footing first. But when will that happen? Cramer said he expects a bottom by the third quarter of 2009.”

Real Estate Markets Most Likely To Rebound (Forbes, October 29, 2008)


Commercial Real Estate Market to Hit Bottom Next Year, Urban Land Institute (Realty Times, January 7, 2009)

“The cyclical real estate markets always comes back, and they will this time too, but not anytime soon,’ said Tim Conlon, partner and U.S. real estate”

“real estate industry experts expect financial and real estate markets in the United States to bottom in 2009 and then flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows”

U.S. Housing Market May Bottom in 2009, Zandi Says (Bloomberg, February 9, 2009)

Home Price Bottom Predicted by Year End (The Truth About Mortage, February 9, 2009)

“The good news is that a home price bottom is expected by year-end, according to one of the nation’s most respected economists.”

“Since their peak in 2006, home prices have fallen about 25 percent, per a Moody’s Economy.com report issued today, but the end may be near.”

“But with home prices falling to more affordable levels and homebuilder inventory sliding to more appropriate positions, stabilization is within reach.”

Home-builder shares jump as February new home sales increase (Marketwatch, March 25, 2009)

Real Estate–What Recovers First? (Forbes, March 18, 2009)

Existing Homes Surprise: Sales Turn Up, Prices Firm (IBD, 3/23/2009)

Signs of life emerging in housing sector (MSNBC, April 7, 2009)

“ ‘Are we at the bottom?’ asks Christopher Thornberg, an economist with Beacon Economics. ‘We are getting close.’’’

“But after a three-year bust, it’s a sign that some markets might be moving in the right direction.”

Real Estate Outlook: A Turnaround May Be In Sight (Realty Times, April 14, 2009)

“We’re past the rock bottom of the down cycle for real estate and now we’re moving into recovery mode.”

“Mortgage applications for purchases of resale and new homes were up again — eight percent for applications using conventional loans, and a remarkable 17 percent gain in applications to buy houses using low-downpayment FHA mortgages.”

“The report quoted Paula Hellenbrand, president of the Cape Coral Florida Association of Realtors, who predicted an end to inventory problems on the near horizon.”

Greenspan Sees ‘Seeds of a Bottoming’ in U.S. Housing (Bloomberg, May 12, 2009)

“ ‘We are finally beginning to see the seeds of a bottoming’ in the housing industry, Greenspan said today during a conference of the National Association of Realtors in Washington. The U.S. is ‘at the edge of a major liquidation’ in the stock of unsold properties, which may help to stabilize prices, Greenspan said.”

U.S. home market shows ‘encouraging’ signs (USA Today, July 24, 2009)

“Home sales rose for the third-consecutive month in June, a promising sign that stability in the housing market could help jump-start the economy.”

U.S. Economy: Home Prices Rise, Confidence Declines (Bloomberg, July 28, 2008)

“ ‘The fact that home prices may be finding some semblance of stability is good news that things are not likely to get worse,’ said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.”

Home prices show signs of stabilizing in May (AP, July 28, 2009)

“Home prices in May posted their first monthly increase since the summer of 2006, indicating prices are finally stabilizing, data Tuesday showed.”

“The Standard & Poor’s/Case-Shiller home price index of 20 major cities rose 0.5 percent from April, but was still 17.1 percent below May a year ago. “

U.S. housing starts keep recovery hopes alive (Reuters, August 18, 2009)

“ ‘The economy is recovering, this is the turning corner. We will have positive growth this quarter, but not a lot of strength. It very much looks like a U-shaped recovery rather than V-shaped,’ said Kurt Karl, head of economic research at Swiss Re in New York.”

Slowly but surely, economy shows signs of recovery (USA Today, August 28, 2009)

“…a nationwide phenomenon: signs of life in the battered housing market and the overall economy.”

“Housing prices rose 2.9% from the first quarter to the second — the first quarterly increase in three years”

Commercial Real Estate Recovery Second-Half 2010 according to Jones Lang LaSalle’s U.S. National Economic & Property Outlook (The Paramus Post, November 19, 2009)

“Commercial real estate markets across the nation already have experienced the steepest pace of declines for the majority of sectors and geographies.”

“While 2010 will be the year a global commercial real estate recovery begins, robust, broad-based growth is not expected until 2011.”


Mortgage Trends Show Real Estate Stability (Wall Street Geek, January 20, 2010)

“The real estate market appears to be steadying based on mortgage activity trends”

In hard-hit markets, some see signs of bottom (MSNBC, January 29, 2010)

“ ‘The epicenter of the boom and bust will be the leaders of the recovery,’ said Lawrence Yun, chief economist for the National Association of Realtors. ‘Those three regions went through a big boom and a big bust and I think they overcorrected and are making solid gains compared to the rest of the country.’ He sites multiple bids on lower priced properties, prices beginning to stabilize and inventory levels coming down as evidence that the bottom is in sight.”

Housing Starts in U.S. Increased 2.8% in January, Permits Fell (Bloomberg, February 17, 2010)

“Housing starts in the U.S. rose in January to a higher level than anticipated, a sign that government support is helping to stabilize the real estate market.”

Home prices rise 0.3 percent in Dec. (The Washington Times, February 23, 2010)

“Home prices rose for the seventh straight month in December, a sign of price stability as the U.S. housing market continues its bumpy road to recovery.”

Warren Buffett sees housing market bouncing back by 2011 (USA Today, March 1, 2010)

“Billionaire Warren Buffett said the U.S. will recover from the residential real estate slump by 2011 as demand for houses catches up with the supply that accumulated during the bubble.”

Housing Real-Estate Recovery Signaled as Fed Unwinds (Update1) (Bloomberg, March 15, 2010)

“ ‘I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,’ said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts.”

Turnaround Coming for Real Estate? (Seeking Alpha, April 9, 2010)

“This also provides more confirmation that the real estate market has bottomed and may even be improving.”

“A year ago the prices of asset-backed securities such as these were priced to Armageddon—to the expectation of truly massive defaults nationwide. Now they are priced to merely difficult conditions, but that represents a huge improvement.”

Wasn’t commercial real estate supposed to crash? (CNNMoney, June 8, 2010)

“Peter Roberts, Chief Executive Officer of the Americas for property giant Jones Lang LaSalle believes commercial property values are in the process of bottoming out and will get to the ground floor by early 2011.”

Real estate market primed for turnaround (Savannah Now, December 30, 2010)

” ‘Once the current oversupply of inventory is absorbed, the real estate market should turn around very quickly,’ said Harvey Gilbert of Gilbert and Lattimore. ‘It’s really just a matter of when.’ “


U.S. housing bottom seen in mid-2011: poll (Reuters, January 28, 2011)

“U.S. house prices are likely to continue to slide before bottoming out sometime in the middle of this year but will rise just over two percent in 2011 as a whole, according to economists polled by Reuters.”

“Asked when they see a bottom for U.S. house prices, 14 of 26 economists said they would trough in either the second or third quarter of 2011. Three saw the bottom coming as early as this quarter, while one did not see a bottom until the first three months of 2014.”

“Sales of U.S. new homes raced to their highest level in eight months in December, but gains were driven by a surge in the West. Even with last month’s gain, new-home sales are down 75 percent from their peak of 1.283 million-unit pace in 2005.”

Why the Housing Bottom Might Be Here (U.S. News, February 2, 2011)

“Yet home buyers are tiptoeing back into the market, amid an increasing number of signs that the fifth year of the housing bust might be the last.”

Will Real Estate Turn Around in 2011? (Outer Banks Market Report, March 2, 2011)

“a bottom is close”

“The OBX – a strong real estate market getting stronger in 2011?! The magic 8-ball seems to be pointing to yes.”

Monthly Housing Market Trends Point in a Positive Direction (Yahoo! News, June 14, 2011)

‘Home sales activity appears to be coming back in line with the seasonal trends we would expect to see this time of year,’ said RE/MAX CEO Margaret Kelly.  ‘It’s a very good sign that prices are starting to rise on a monthly basis.  This may indicate that we’ve turned the corner and are headed in a positive direction.’

Home Prices In U.S. Showed Signs Of Stabilizing (Bloomberg, August 30, 2011)

“Residential real estate prices in the U.S. decreased in the year ended in June at a slower pace than in the prior month, a sign the market may be stabilizing.”

“The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent from June 2010, after a 4.6 percent drop in the 12 months ended May that was the biggest since 2009, the group said today in New York. The median forecast of 31 economists surveyed by Bloomberg News projected a 4.6 percent decline.”

Housing market predictions for 2012 (CBS News, December 7, 2011)

“But in a surprising turnaround, Fannie Mae’s November National Housing Survey found that homeowners believe that their home value will rise 0.2 percent over the next year.”

“Looking forward, the biggest indication that the housing market might begin to normalize is that the number of homeowners who are seriously delinquent in their loan payments is shrinking.”

Is housing bouncing back? (The Washington Post, December 20, 2011)

“The deeply depressed housing sector finally seems to have found its bottom — and may even be starting to bounce back.”


Has The Housing Market Hit Its Bottom? (Forbes, January 10, 2012)

“Wall Street firms have optimistically been betting that the bottom’s here. Research firms like Zelman & Associates predict the sector will pick up this year and hedge funds have been jumping into real estate-related investments from brick and mortar building purchases to shares of home builders stocks.”

Homeownership rates fall to 66% as downturn nears a bottom (USA Today, February 1, 2012)

“ ‘The trend is down, and there are few, if any, signs in the numbers that a turning point is close at hand,’ says David Blitzer, chairman of S&P’s index committee.”

Ready to Rebound (Barron’s, March 19, 2012)

“After falling 34% over the past six years, U.S. home prices will soon bottom.”

Has the Housing Market Finally Hit Bottom? (Time, April 27, 2012)

“The information superhighway is littered with the corpses of pundits who have erroneously called the ‘bottom’ of the real estate market, but hope springs eternal. This week produced two reports which have analysts optimistic that we’ve reached that point.”

Mortgage-Bond Bigwig Lewis Ranieri Calls Housing Bottom (U.S. News, May 7, 2012)

“The housing market has reached bottom, according to mortgage bond pioneer Lewis Ranieri, joining a growing chorus of other expert voices who say the long slog downward might finally be coming to an end.”

Report: Housing Market Recovery Has Officially Begun (TIME May 15, 2012)

“A new analysis suggests that home prices will begin to rise later this year.”

“The double-digit increases in U.S. housing prices over the first half of the past decade proved unsustainable. But the freefall is over. The point has been reached where housing prices will start to climb, albeit at single-digit rates in most markets over the next five years.”

“The Demand Institute’s report is one of the most comprehensive and substantive arguments we’ve seen yet that the housing market is nearing the light at the end of the tunnel.”

Housing starts add to recovery signs (Reuters, May 16, 2012)

A rebound in groundbreaking for homes in April suggested the housing market recovery was gaining some traction, even though permits for future building fell.”

Buyer alert: Rising prices ahead (Boston.com, May 22, 2012)

“We are primed for a home price turnaround in Greater Boston and across Massachusetts.”

“That’s the verdict from Tim Warren, chief executive of The Warren Group, after the release this morning of home sales and price numbers for April by his Boston-based real estate data firm and publisher.”

April new-home sales increase 3.3%, pointing to recovery (Detroit Free Press, May 24, 2012)

“Americans bought more new homes last month, the latest evidence that the U.S. housing market could be starting to recover.”

“The gain pushed the annual sales pace to its second-highest level in two years. Economists were encouraged by the increase but cautioned that new homes are still selling at half the rate consistent with healthy markets.”

Real estate could be on the rebound (DelMaravnow May 27, 2012)

“the national market, which saw sale prices in April jump nearly 5 percent higher than the same month last year, the Commerce Department said Wednesday. The number of homes sold was up nearly 10 percent, too.”

Housing Market May Finally Be Turning Around With Sales Up 10 Percent In April (Huffington Post, May 28, 2012)

Housing Prices Show Signs of Stability (Wall Street Journal, May 29, 2012)

“Sinking prices have made a mockery of their exhortations, but the S&P/Case-Shiller index of home prices in 20 major cities is showing signs of stabilizing.”

“But if prices really are turning the corner, that has positive implications for banks’ and consumers’ balance sheets.”

U.S. Home Prices: Has the Tide Turned? (ABC News, May 29, 2012)

“Average home prices rose in March compared with February in most of the 20 cities in a Standard & Poor’s/Case Shiller survey out today – the first time in seven months there’s been a gain. This report adds to the growing evidence that the worst of the five-year housing slump appears to be over.”

Home prices at post-bubble lows but may point to market stability (LA Times, May 29, 2012)

“Home prices in the U.S. ended the first quarter at their lowest point since the housing crisis, with values in 20 major cities dropping 2.6% in March compared with the same period a year earlier.”

“Analysts believe the data could signal stability in the turbulent housing market, if not a nascent turnaround.”

The Housing Bottom Is Here (Business Insider, May 29, 2012)

“The headline sequential gain for the 20-city composite was just 0.09%, bit below the 0.2% that analysts had expected. But it’s obvious: Housing is bottoming.”

“As S&P’s David Blitzer said on CNBC today: Housing is ‘a whole lot better than the headlines’”
“The bottom line: Every single measure out there is showing gains price gains.”

S&P: Home Prices See New Bottom, Recovery On Deck (Reverse Mortgage Daily, May 29, 2012)

“The rate of decline has moderated, however, suggesting that a recovery is near.”



Did I miss any worthy of note? Let me know in comments and I will add them . . .

Category: Financial Press, Real Estate, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

46 Responses to “Yeah! The Housing Bottom Is Here! (PWBC™)”

  1. Patrick Neid says:

    Proving once again the old Chinese proverb, “Man who pick bottom ususally have shit on finger”….

  2. doug86 says:

    …. something about a broken clock being correct twice a day…

  3. aman86 says:

    No list of boners is complete without Mark Zandi!

  4. Petey Wheatstraw says:

    You’ll be updating this list until at least 2022.

  5. constantnormal says:

    The “News” is a commodity to be sold — instead of accurate reporting — and as such, “Good News” sells better than “Bad News” (unless it’s bad news for a long-standing and hated enemy).

    Want accurate reporting? De-commercialize the news media. Remove the profit motive … unless you can figure out a way to rationally reward accurate reporting, even when it’s news that people really don’t want to know.

    I’m really surprised that medicine has not glommed onto this, with AMA-approved fake miracle “cures” for all manner of painful or terminal diseases …

  6. Orange14 says:

    Best ongoing collection of data comes from Calculated Risk (http://www.calculatedriskblog.com/) and while things are still not pretty they seem to be “approaching” the bottom. In fact in Las Vegas homebuilding appears to be picking up (who would have thought it). Clearly we are not going to approach the bubble days of home construction anytime soon but I suspect that the bottom will be reached in the next several months. I’m somewhat jaded anyway since I live in Metro WashDC and we haven’t been hit much at all.

  7. 873450 says:

    “S&P: Home Prices See New Bottom, Recovery On Deck ”

    Give praise to S&P for slick analysis.

    Until prices actually do bottom out, pivot and permanently reverse trend the S&P prognosis will always be 100% accurate. Every bottom is “New” and recovery is always “On Deck.”

    At some point the projection changes to – “S&P: Home Prices See New High, Decline On Deck”

  8. theexpertisin says:

    Great summary, BR.

    Don’t expect a Thank You note from the NAR.

  9. streeteye says:

    New and existing home sales are both up from a year ago, on an not-seasonally adjusted basis (New, every month since October, existing since last July).

    Not really clear what would change the supply situation, there’s shadow inventory but it’s not increasing, it’s gradually getting worked through. On demand side, rates, credit availability, incomes improving. Seems more likely that the housing market will go as the economy goes.

    Which could of course go off the rails if Europe/BRICS/debt ceiling/fiscal cliff goes south.

    But people are calling the bottom who weren’t for the last 4 years.

  10. rktbrkr says:

    LOL, you did your homework Barry! A+

    I’m watching how the end of favorable tax treatment for shortsales plays out as we approach the 12/31 deadline. Meeting the 12/31 deadline is a lot more important to the individuals than the banks who are notorious for not moving quickly on shortsales. I think the pain index for having the IRS pursue you for post 12/31 shortsales ORDINARY INCOME will be a lot higher than the credit hit for a foreclosure sale, go past 12/31 and you might be following up a short sale with a bankruptcy filing which will definitely hurt your credit score!

    As debt forgiveness tax break is set to expire, look carefully at your options
    September 25, 2011|By Michelle Singletary, The Washington Post

    The time is limited for homeowners who want to ensure they aren’t hit with a big tax bill because they had to walk away from a mortgage obligation.

    At the height of the housing crisis, when foreclosures across the country began a troubling increase, Congress passed the Mortgage Forgiveness Debt Relief Act of 2007, designed to provide at least some consolation to folks who had lost their homes.

    But it gets complicated.

    If you borrow money and the lender then cancels or forgives the debt, you generally have to include the canceled amount as income for tax purposes. As the IRS explains, you aren’t taxed on borrowed money because you have an obligation to repay it. However, if the debt is wiped out, the lender is then required to report the amount of canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

    That’s where the mortgage debt relief act comes in. It allows people to exclude income from the discharge of debt on their principal place of residence. In addition to foreclosure, debt reduced because of a mortgage restructuring also qualifies for relief under the new law.

    As always, there’s a catch.

    The law says that only debt forgiven in calendar years 2007 through 2012 is eligible. Up to $2 million of forgiven debt qualifies for this exclusion ($1 million if married filing separately).

    To get the relief, debt must have been used to buy, build, or substantially improve a principal residence and be secured by that residence.

    If you’re clinging to your house but it’s looking as though you won’t be able to hang on, the best time to get out from under the mortgage is before the debt relief law sunsets. This is particularly true if you are thinking about a short sale. That’s when the lender allows the borrower to sell the house for less than what is owed. Often, the borrower can negotiate to have the remaining balance on the mortgage forgiven.

    The tax rule has become particularly important as more homes are sold through short sales, which accounted for 12 percent of all housing sales in the second quarter, up from 10 percent for the same period last year, according to RealtyTrac.

    However, here’s the problem if you wait too long to start the process: Short sales are being dragged out for months. Talk to real estate professionals and many might suggest the term short sale be changed to “long sale.’’ I’ve seen several people who wanted to buy a home through a short sale walk away because the transaction was moving too slowly.

    You shouldn’t rush into a short sale or let your home go to foreclosure just to avoid a tax debt. But the impending end of the favorable tax rule on forgiven mortgage debt should be one of the things to consider if you conclude you can’t afford to keep your house.


  11. [...] Barry: I got your Housing Bottom right here, partner.  (TBP) [...]

  12. [...] – Taibblog Housing Has Already Reached the Inflection Point: McBride – Yahoo! Finance Yeah! The Housing Bottom Is Here! (PWBC™) – The Big Picture New Survey: Taxmageddon Paralyzes Business Plans – Fiscal Times [...]

  13. sailorman says:

    Southwest Florida led the market down. It has definitely bottomed. Inventory is way down. The number of buyers are up substantially and there are very few properties on the market. The change from 2 years ago is very substantial.

    No one here listens to this. I post it every time I see a blog item about how the bottom is fiction. I am sure that areas that didn’t suffer the dramatic drop of SW Florida have not bottomed. All I am saying is the area that led the market down has bottomed. Look at any data you like and you will see the evidence.

    Come down and walk into a Sunday open house. In 201o, the only person you would find in the house was the selling broker. Now the place will be crowded with buyers. The buyers are all bargain hunters and will not overpay, but no one will find a house in my area at $108 per square foot that I did in 2008. If I put my house on the market at that price today, I would sell it in a day with multiple bids.

  14. Mike in Nola says:

    @sailorman: You have to remember that nothing goes straight up or down. Your area may have bottomed or it may be a case of people trying to catch a falling knife, esp. if we go back into recession.

    Lately a few of the more credible people have jumped on the bandwagon, like CR in a Yahoo column:
    Yet, if you see what they are citing for evidence, it’s such things as the always-credible NAR and the “decrease” in inventory which has really been caused by lenders refusing to foreclosure or lenders sitting on REO’s.

    There are a few houses I’ve been following in Houston out of nosiness, some for several years. They’ve been shown as being in foreclosure for the past couple of years and have been on and off the market for that time.

    An interesting case is this house that looks like it finally sold about a month ago. While it’s in a nice neighborhood, somehow the guy managed to borrow over $700k on it during the bubble, which was crazy. You can see the listing history on Zillow here:

    Felt sorry for him as he was really desperate for a long time. Even met him as he had an “estate” sale when he finally moved out and we got a real bargain on a nice rug for $30. Yet, there was never a foreclosure which tells you a little about how screwed up things were. It was finally sold in a short sale a month ago. The lenders gave up $277k out of $700k. Sure looks like a bottom to me :) I’m sure it will do wonders for comps in a neighborhood full of McMansions for sale by builders who just keep putting them up and asking $200+/sq.ft.
    Here’s the gory details on the short sale
    Must be embarrassing having your huge financial misstep documented on the web.

    Another place that has been on and off the market for 2 years still hasn’t sold. It’s a townhouse in a desirable area of Houston near the Medical Center. Started out for sale at $329k two years ago. Finally foreclosed on by Fannie Mae last fall and once again off the market with the last asking price being $215k. As far as I can find, no sale in sight. Here’s the Zillow page: http://www.zillow.com/homedetails/3516-Bellaire-Blvd-Houston-TX-77025/27871587_zpid/

    Since it’s once again off the market it’s not part of the decreased inventory that keeps being cited.
    Interestingly, through the assessor’s site, I found that Fannie Mae is the record owner of 750 properties in Harris County. God knows how many more they could foreclose on. Yet, if you go to the Fannie Mae foreclosure sale site at http://www.homepath.com/search.html?openHouse=&st=TX&cno=201&ci=&zip=&src_ref=&mlsid=&pi=&pa=&bdi=&bhi=&x=56&y=20 there are only 386 listed, or about half. Where’s the others? I haven’t found anything indicating the number of Fannie Mae REO’s has suddenly jumped.

    And I would like to point out that this is in Houston which has been buoyed by the commodity bubble and touted as an island of prosperity, which it is, relatively. Could be big crash in the market here if oil continues to sink. So, while eventually the bottom callers will be right, I don’t believe we are there yet.

  15. dead hobo says:

    It’s rather unfortunate these fellows and ladies are so consistently in error. I really don’t understand it. How can these people be so wrong so often while apparently the vast majority of pundits, analysts, money managers, tv personalities, reporters, and the like are usually right … especially if you happen to like them. Of course, if you don’t like one, his/her analysis is worth about the same as shit that has been freshly scooped from someone’s ass. What is it about real estate that makes people go suddenly stupid?

  16. rktbrkr says:

    The bump in early stage (foreclosure) filings means a logjam that has existed for months has begun to break, with banks refiling stalled cases, experts said.

    “I am seeing a lot of cases that were previously dismissed being refiled,” said Nancy Cason, an attorney at Sarasota’s Syprett, Meshad law firm.

    Overall, the 1,310 foreclosures filed last month in Southwest Florida were up 6.6 percent from March, RealtyTrac data shows.

    Many of the refilings are occurring because law firms retained by banks submitted faulty paperwork, prompting lenders to call a halt to foreclosures in 2010 and into 2011. Judges dismissed many of those cases. Now those lenders are once again attempting to gain control of properties with delinquent loans.


    The boa constrictor (BofA,Wells etc) in the judicial states like FL is just starting to poop out REO sales after being ROBO signing constipated for 1 year+.

  17. Whiskey Lunch says:

    Calling a housing bottom while jobs are still in the crapper is just crazy talk.

  18. willid3 says:

    thinking housing will have bottomed when it gets somre sort of realistic realtionship to incomes. so far that hasn’t happened

  19. Julia Chestnut says:

    Mike in NOLA, my friend, I can’t believe things are selling at those prices in Houston. I sold a house out in Timbergrove that is now on Zillow for $20,000 less than I got for it in 2006. And it’s been flipped a couple of times. And the market really has been buffered by reasonably stable employment and growth, with the oil industry. You know how that goes – when it’s booming we’re living high, and when it busts, we’re all waiting tables in the strip clubs.

    I know a couple of people in those townhouses – they had extraordinary life circumstances that forced them to take out second mortgages, both families. I will remember to say a prayer for my lovely friend who lost her daughter to cancer who lives there. They really are nice townhomes.

    Which brings us to the insanity of calling a national bottom when real estate is intensely local. Every market is its own animal, which should have made us skeptical when housing nationwide went soaring.

  20. rktbrkr says:

    @Mike in Nola
    Where did you find the Fannie (FNMA) owned props? I checked the NJ county assessment records (owner of record) and couldn’t find any, do they hold in a different name than FNMA or Fannie?

    I think they have been moving faster clearing their inventory of REOs than the big banksters, I know they’ve worked down their inventory numbers in FL although the pool keeps refilling.


  21. Winston Munn says:

    You left off Kevin Bacon: “Remain calm. All is well. All is well! Remain…”

  22. Stirling Newberry says:

    What is driving the housing uptick is the stabilization of professional salaries, lower mortgage costs and a more orderly REO pipeline.

    It is a bottom until the next economic downturn, and the worst case scenario for investors: almost all of the bargains are gone or not accessible to ordinary investors, while what is on the market will not appreciate because there is a long pipeline. I’m doing this in upstate New York now, and there is inventory being kept off the market and that is hamstringing real gains.

    No bargains, no upside, should mean no interest from investors without pipeline access.

  23. [...] calls have been numerous, and they’ve all been spectacularly wrong.  Barry calls them “Perennially Wrong Bottom Callers” or PWBC’s for [...]

  24. kek says:

    Seems residential real estate has bottomed in Phoenix. Prices up yoy, and a definite lack of inventory. Houses still selling at 65% ish of replacement cost.

  25. Tim says:

    TWO DAYS AGO: Keith Jurow: Prepare for the Coming Housing Collapse, May 29, 2012:


  26. lalaland says:

    I think the Case-Shiller data isn’t reflecting what’s really happening out there, because it excludes the following criteria: ‘The S&P/Case-Shiller indices do not sample sale prices associated with new construction, condominiums, co-ops/apartments, multi-family dwellings, or other properties that cannot be identified as single-family.

    With more people living in cities than ever before as a % of population, the coop and condo + multifamily (like here in Brooklyn, where we have a huge stock of 2-3 family buildings) markets are both more important than ever as a metric, but also represent the most accessible housing. In Brooklyn (which is fairly representative of NYC) in Q4 2011 22% of sales were coops, 30% were condos, and 46% were 1-3 family houses (citywide, less than 1/2 of 1-3 family houses were 1 families, so even that gets cut). So Case-Shiller probably counts 23% of the market, and, counter-intuitively, most house sales in NYC are in less desirable, not more desirable neighborhoods (further from public transportation, etc). From what I hear single family homes are 2% of the Manhattan market, which, according to UrbanDigs is up 18% YOY in pending sales (real time).

    Same goes for many cities: “A total of 24,929 condominiums and homes were sold in Miami-Dade County, up 46 percent from 2010 and up 4 percent compared to 2005, according to the Miami Association of Realtors and the Southeast Florida Multiple Listing Service. Condominiums sales surged 54 percent, to 15,009 in 2011″ So more than 1/2 of Miami isn’t counted.

    Condos are more than 1/2 the San Francisco market: http://my.paragon-re.com/Docs/General/SixtyFortyImages/Unit_Sales_by_Property_Type.jpg

    I’d also add these guys, who have awesome regional data: http://www.dqnews.com/# A reading of their Las Vegas report, for example, has a ton of positive changes and very few negatives, and condos are a good chunk of the market there.

    Anyway, all I’m saying is the most affordable segment in the biggest cities – where most jobs will be created, and which should lead the recovery – isn’t being considered, and that data is fairly positive across a lot of markets. The limits on the data being collected might be impacting it’s (perceived) reflection of the broader market.

  27. Mike in Nola says:

    Are you talking Houston? Let me know what strip club you’re working at so I can pass by :)
    Those townhouse do look nice. We live in Linkwood, so I pass there fairly often. We have been renting a few years and I’m keeping an eye out to buy as our last house. The problem with townhouses is the two stories, so I suppose none of those will work. One next door to the one I cited is asking $299, but looks really nice. They put a lot of upgrades into it recently; don’t know if they will get it all back.

    @rktbrkr :
    It’s probably a website-dependent feature. The assessments in Houston are at http://www.hcad.org/ It has a feature where, if you find a house record, you can click “similar owner name” to see what else that person owns. For that townhouse I cited, it shows the owner as FEDERAL NATIONAL MORTGAGE ASSOC” and clicking the similar name button showed 750 other properties. I tried just searching for Fannie Mae as an owner and got 30+, so conceivably, there could be even more under variations of the same name. Other than that http://www.homepath.com site, I don’t know of any generalized listing of Fannie Mae held properties.
    There should be, but then they couldn’t fudge the numbers.

  28. Mike in Nola says:

    I shouldn’t waste so much time on this, but rktbrkr’s question got me curious. I tried searching hcad.org for BAC and got 500+ hits under variations of BAC Home Loan Serviciing. Then tried Bank of America and got another 400.

  29. BuffaloBob says:

    Atlanta was late to the party, but prices are now cratering. No sign of a bottom in my neighborhood.

  30. louis says:


  31. Hammer of Thor says:

    BR, when do you predict we’ll see a bottom?

  32. [...] Seriously people stop calling for a bottom in housing prices.  (Big Picture) [...]

  33. Woj says:

    Let everyone else keep hoping…

  34. Julia Chestnut says:

    Mike, I was in Houston – I’m living in a different swamp now, LOL. I lived in Houston for a decade, and enjoyed it there. My spouse, on the other hand. . . . we had to move to a neutral third country, Texas wasn’t for him, and I’m not moving to Northern California.

    So many adorable ranches and bungalows all over Houston – no reason to get a townhouse. There are still nice pockets around $200k inside the loop, I think. You just have to look a bit. Try the Old Sixth Ward: with the revitalization of Washington Blvd, that is getting to be a really great area.

    Man, do I miss the food though. Having to make refried beans from scratch is downright sobering when I used to be able to drive through and a have a woman named Lupe hand me some for FREE with a couple of real tacos. [sigh]. And don’t get me started on missing the Rodeo. . . . .

  35. rktbrkr says:

    Mike in Nola,
    You got me thinking too. I am going to fish around to see if I can find any variations of Fannie Mae name and also the big banks. DB mortgage service co ends up with a lot of the corpses.

    Maybe we should look to see what comes up with a MERS search! The name variations could just be CHAOS or maybe there is an intent to cloak the numbers in the shadows, I don’t see any benefit for the banksters to open and forthright about these things!

  36. ptm says:

    “The most dangerous place to stand is between someone and what they want to believe.” The money will tell when the bottom feeders are running out of fodder. And it will be local, until the nation has the jobs necessary to pay for the housing.

  37. Mike in Nola says:

    Julia: Being from New Orleans, I can’t say I greatly enjoy the food here, other than a few Tex-Mex and BBQ places we’ve found. The bakeries are generally pretty bad, but may be spoiled from having a pair of French brothers open a bakery around the corner from out house in NOLA.
    Northern Cal sounds great to me other than outrageous housing prices. The idea of not needing air conditioning is like a wonderful dream to a Gulf Coast boy.
    On the housing front, I’m keeping my eyes out here along Braes Bayou. Our neighborhood is almost all 1950-60 houses with lots of trees. No sidewalks, but lots of people walk the neighborhood just in the street. Very quiet and you know your neighbors, unlike the burbs. Can see prices slowly settling down. Being patient.

  38. Mike in Nola says:

    rktbrkr: Tried MERS with no luck. Then tried “Mortgage Electroni” (that’s all the space they give you) and got 23 hits. I thought about it and realized that MERS was supposed to be a replacement for recording ownership in local government records, so I don’t think you would expect to find any unless MERS actually managed to foreclose on someone. Many foreclosures have been defeated on the basis tha MERS is just a record keeper and has no standing to foreclose.

    Looked up some others:
    Wells Fargo – 500 hits
    JPMChase – 170 or so

    Freddie mac gets no hits, but Federal Home gets almost 500 mostly under Federal Home Loan Mortgage Co.

  39. wally says:

    Face it, BR: you still are confusing ‘bottom’ with ‘recovery’.

  40. [...] Yeah! The Housing Bottom Is Here! (PWBC™) [...]

  41. rktbrkr says:

    Mike in Nola,
    I searched for deed owner which would be REO equivalent I believe and found hundreds at county level for “federal” and “bank” (only a few MERS). I looked at a variety of NJ counties. Essex (Newark) had about 3500 of 350,000 properties held by federal and bank, also a few hundred owned by HUD – but that might be intentional ownership. Ocean, a big exurban county where a lot of lowish middle class people got in too deep in the past 15 years had about 2500 of 500,000 in those categories. Monmouth and Atlantic counties had rates somewhat less than Ocean. So SWAG I’d say 1/3% of properties are bank owned in NJ but it’s a long slow pipeline to get to bank REO in NJ

    It takes a loooong time for foreclosures to make it thru to bank owned in NJ, second only to NY.

  42. [...] wrong this group has been – take a moment to scan through some if it – the link can be found here. Below are some of my favorite headlines and excerpts which illustrate how consistently wrong the [...]