Statistics Reveal Housing Market Bottom is Close

How close are we to a bottom in the housing market? If The PMI Group is right, we're closer than you might think. PMI, a mortgage insurance firm, looks at trends in home prices, local wages and employment, and other factors to calculate the likelihood that home prices in a given city will be lower two years from now than they are today. Based on their calculations, about 65% of the nation's housing markets have less than a 10% chance of falling, and 38 of the top 100 have a less than 1% chance.

· In October 2005, near the peak of the boom, the median sales price for a U.S. home reached 7.3 times per capita income; by this May it had fallen to 5.7, in line with historical norms.

· Nationally, the rate of decline in sales is slowing, and in some regions sales numbers have actually perked up. “The indicators are starting to look better,” says Adam York, an economic analyst with Wachovia.

· The national sales figures that get so much attention … are brought down by boom-and-bust markets like Las Vegas, Miami and Phoenix. If hard-hit states like California, Arizona, Nevada and Florida are taken out of the statistical mix, the picture is much more promising.

· The government’s sweeping bailout of the financial sector could boost the housing market by making borrowing easier for buyers.

-- “Home Prices: Now for the Good News,” by Brad Reagan and Elizabeth O'Brien, Smart Money Magazine, Oct. 17, 2008.