Ian Shepherdson, Chief U.S. Economist of High Frequency Economics has touted his bearish housing market views for months. In fact, he predicted something of a summer meltdown. He’s certainly in an enviable position to say “I told you so,” to his critics, especially since current statistics continue to prove him right. Most recently, he reported on the growing supply of homes on the market.
“The absolute number of existing single family homes for sale is now 35% higher than a year ago, a record. The number of months’ supply, which takes account of the slowing in home sales since last summer, is up 41%, also a record. As a result, price increases are screeching to a halt. Single-family home prices are now up just 4.3% year-over-year, compared to a peak rate of 16.9% just six months ago. Seasonally adjusted, prices are now falling outright, and we expect the year-over-year rate to dip below zero in the summer. If we’re right, implied real mortgage rates will rise towards 10%, a level that in the past has always driven home sales well below their long-term trend. Right now, total home sales are about 35% above trend, so it should be clear that we think the downside risk for housing activity is substantial.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.