IS THE REAL ESTATE BEAR MARKET BEGINNING TO BOTTOM OUT?

The following data has been extracted from the Winans International Real Estate Index. The data shows significant increases in new home sales (unit sales, not prices) which has led to a decline in new housing inventory.

Percentage Change Since December 31, 2008:

U.S. West NE South Midwest

Price -2% -5% -8% 3% -5%

Sales 56% 50% 50% 21% 75%

Listings -34% -24% -14% -19% -19%

U S Housing Inventory = 7.9 months
Median Number of Months For Sale = 11.8 months

All regions across the U.S. have seen significant increases in new home sales which have led to a 21% decline in new housing inventory. During the real estate slumps in 1968, 1981, and 1990, sales increases and housing inventory decreases were important signs that the worst was behind U.S. homeowners.

“While the sales activity is encouraging, U.S. housing prices will probably remain soft for the remainder of 2009. Past real estate bear markets ended when the average time it took to sell a new house dropped to 3 1/2 months.


Currently, it is taking nearly 12 months, and with mortgage rates climbing, I don’t see this situation improving soon,” says Ken Winans, award-winning author of “Investment Atlas.”

It is important to realize that statistics for new homes sales vary from statistics from existing home sales. However, new home sales are a leading indicator. If last January’s prices end up being the low for this bear market, this will officially be the worst residential real estate bear market in price decline and duration since World War II.

While this housing slump is bad, it is not record setting. The worst decline of U.S. new home prices in the last 150-years was the -68% decline from 1929 to 1932. The worst housing bear market in duration took place between 1853 to1858.

The Winans International Real Estate Index (WIREI) measures U.S. new home prices from 1830 to present day.