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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (45940)	11/16/2009 1:02:25 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70948

House Prices Still Have A Ways To Fall Posted Nov 16, 2009 07:30am EST by Henry Blodget in Investing, Housing Related: XHB, TOL, KBH, LEN, SPY, DIA A argument broke out this summer when house prices unexpectedly began to rise again. "Recovery!" shouted the bulls, who declared that the two year housing crash was over and prices would begin a long rise back to old highs. "Head fake!" shouted the bears, who attributed the summer price rise to seasonality and predicted that the housing crash would resume this fall. Who was right? We don't know yet. The main house-price index, Case Shiller, appears several months after the fact, so the most recent national data we have is for August. As of then, house prices were still rising. Our guest Dan Alpert of Westwood Capital sides with the bears. Why? Because, in his view, house prices are still too expensive. Price-to-rent ratios, Alpert says, have fallen only 75% as far as they need to to get back to normal levels. To make matters worse, rents are now falling, which will further inflate price-to-rent ratios, suggesting that they could fall even further. The main problem, Alpert says, is that we built too many houses. Speculators are jumping in and buying houses to rent, and the increase in rental inventory is putting pressure on rents. This, in turn, is making it more attractive to rent instead of buy, which puts pressure on house prices. This oversupply, Alpert thinks, will pressure prices and rents for years.