Agoracom Blog

US Real Estate – Why I Continue To Be Seriously Bearish

Posted by AGORACOM at 6:06 AM on Saturday, August 20th, 2011

I continue my 2009 bearish call on US real estate for all the same reasons … and I see nothing to even begin changing my mind.  The best Americans can hope for is a base at current levels … but my call is that US real estate is going to get worse.

If for no other reason, consider the fact that US real estate prices have failed to move higher despite US Federal Reserve ZIRP (zero interest rate policy), which we now know will continue into 2013.  God help homeowners if the bond markets decide to take matters into their own hands and demand higher rates, or if the Chinese decide enough is enough.

In the meantime, have a look at the following graph illustrating US home inventories, courtesy of the good people over at Calculated Risk …  Despite the fact that home inventories are actually lower to the tune of 8.9% over last year, the months of supply is moving higher due to a slower sales pace. That kind of divergence can only be described as bad … very bad.

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