Jim Cramer, during his “Mad Money” TV show, predicted the bottom of the market. The interesting thing about Cramer’s prediction is that it is focused on stocks (particularly the stocks of builders) and not specifically on housing. Obviously, an investment person like Cramer would focus on that side.
There have been a great many predictions about the market. So far, they have all been pretty bad. When the market was turning down, there were a great many people telling you to look up. When the market started its freefall, the doomsdayers talked about 1929 and the Great Depression. If you believe many of the big real estate organizations (you know who I am talking about), then you would have believed, for about two years, that it is turning around ‘next month’/'next quarter’/'next minute’/etc. Any length of time at all so that you wouldn’t feel there is a panic. Obviously, they have a stake in the market (i.e. our jobs) so they don’t want anyone to feel bad about it.
The amazing thing is that this is just a correction like free markets make. They happen on a regular basis. They always happen. The market always bounces back. The other interesting thing is that the market never goes to ‘zero’. We never have a month where no one buys or sells a home. Even in the 1980′s, when interest rates went to 18% and beyond!, people still bought and sold homes. There are still millions of people who are moving their families from place to place. In fact this sales market has turned into a boom in the rental market. People have to have a place to live. You may have been foreclosed upon or gone through bankruptcy and lost your home, but you can’t move your family into a cardboard box and most families cannot handle the burden of taking in another family. So what happens? They rent. And the market and the cycle continue.
In 3-5 years, when these bad credit renters have cleaned up their credit reports, increased their credit scores to a decent level, shown that they are good risks for banks and they have grown very tired of renting, they will start talking about buying again. And then guess what? The market will boom right back up because all of these people (who have no home to sell) will come back in the market and start buying up available homes. And the cycle goes on…