One thing we know – the housing bottom isn’t here. What you don’t know is it’s closer than you think.

Here are just a few news bits from December that suggest the housing market is bumping along, but not inclined to deteriorate much further. 

·        Foreclosures are easing, but may spike due to unemployment surge. November foreclosure notices down 7 percent from October, but remain 28 percent higher than a year ago. (RealtyTrac, December 11, 2008)

·        The majority of the sub-prime loans in trouble have reset or are in foreclosure. A record one in 10 American homeowners with a mortgage was either at least one month behind on their payments or in foreclosure at the end of September (Mortgage Bankers Association, December 2008)

·        We’re adding population, requiring more housing – try 25 million since 1998. (U.S. Census, www.census.gov)

·        Home inventories are going down, not up. (National Association of REALTORS®)

·        For the first time in 56 years, households are paying down personal debt. Households paid off more mortgage debt than they acquired for the first time ever, causing mortgage debt to fall at a 2.4% annual rate to $10.54 trillion in Q-3, 2008. (Federal Reserve.)

·        Mortgage rates are steadily dropping to near-record lows. The 30-year average has not been lower since March 25, 2004, when it averaged 5.4%, (Frank Northaft, chief ecomomist, Freddie Mac )

·        Mortgage applications up over 2 percent in early-mid December, still 51 percent below same period in 2007. (Mortgage Bankers Association, Dec. 2008.)

·        Job declines largest since December 1974. Unemployment at 6.7 percent and rising. (Department of Labor.)

·        Affordability has increased. The median home buyer income of $61,500 allowed 56.1 percent of homes to be sold as “affordable.” That’s 15 percent more than the 40.4 percent of families who could afford homes at the peak of the housing boom. (National Association of Home Builders/Wells Fargo Housing Opportunity Index.) 

·        Sales and affordability are the same as they were 10 years ago, but we've added 25 million to the population and 13 million jobs. (Walt Molony, NAR) 

·        Treasury and Federal Reserve efforts to lower interest rates are effective. Rates could fall below 4% for 30-year-fixed-rate mortgages. (James Lockhart, Treasury Department regulator, Fannie Mae and Freddie Mac, December 2008)

What these news items suggest is capitulation – that point at which consumers are giving up. When consumers give up, investors tend to move in. That’s the closest anyone will get to calling the bottom.