Two charts of the expected development of the house prices in the US: ee plaatjes van de ontwikkeling van de huizenprijzen in de VS: above the one of Goldman Sachs (Hatzius c.s.) and below the one of the house futures (radar, housing report to Obama) (source Calculated Risk).
Goldman Sachs thinks the house prices in the US are now at an equilibrium level but will overshoot somewhat to the downside before they will rise again. The trend of the Case Shiller prices for the prices in 20 biggest cities point in that direction.
The futures however price in a rise. We should have seen the low. These futures don’t look too optimistic. In 2009 the futures prices were too pessimistic, even while they saw earlier a turn in the prices.
At the moment you see a divide in the price development: the prices of forced selling (foreclosures) are still in a solid downtrend, while the houses that are sold normally are rising again. For the time being the foreclosures did win from the voluntary sellers, but maybe that is already over. Credit growth is accelerating and it is becoming less difficult to get a mortgage (even while it is still difficult). At many places not enough is built, the number of households is growing since employment growth is decent. This ought to lead to higher prices in an ever bigger part of the country (unfortunately I can’t give a guarantee).
It is odd that so many Americans think that the current house prices are normal, in equilibrium and not very cheap as the Europeans think or the price to rent or the record high affordability indicate.
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