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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: jmiller099 who wrote (80674)6/26/2008 12:23:57 PM
From: SouthFloridaGuy  Read Replies (1) of 116555
 
Yes.

I don't know if people have looked at National City's heat map, but they do a very interesting analysis of historical affordability on a regional basis.

I actually get proprietary info on the major MSA's from a well known PhD starting a distressed fund and indeed in many cases fundamental data does not point to a strong upturn in housing, BUT valuation on a stand-alone basis is not the main issue anymore.

3-4 years ago when we were all bearish (correctly, I may add), most of the nation was in "Red" meaning severe overvaluation. Coupled with PMI's MSA risk report, the chances of a massive decline in housing should have been blindly obvious.

As of Q1, the drops in some areas have been so massive the most overvalued areas are now at fair value. Indeed, some like San Diego are undervalued.

However, we could indeed be at the stage where things get ridiculously undervalued. But how that happens is always a mystery. It can be through a lower rate of housing appreciation versus rents (I suspect this will be the case). Alternatively, if one believes the Japanese scenario, it would be years and years of nominal declines.

But if one believes the latter, interest rates would also have to fall as well.
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