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Are we seeing first signs of a bottom in housing?

Calculated Risk is one of my favorite housing-related blogs, even if I don’t know who really is the man behind the curtain (the anonymous author only describes himself as “a senior executive, retired from a public company, with a background in investing, finance and economics.”

Whoever he is, Mr. Risk has stirred the pot with one of his latest blog entries, in which he makes the provocative argument that we may be seeing the tentative first signs of a bottom in housing (or at least, a pre-bottom, if that’s even a word). He admits that we’ve still got to work through a lot of pain before housing markets really recover (and on that point, notes that in previous housing bubbles, housing prices fell for 5-7 years before they turned up again—meaning don’t count on an upturn until 2010 or 2012.)

One of the statistics that he hangs his hat on is “homeowner vacancy rates.” As he puts it:

Another piece of potential good news is that it appears the homeowner vacancy rate (from the Census Bureau) might have peaked.

The rental vacancy rate has been trending down for almost 3 years (with some noise). This was due to a decline in the total number of rental units in 2004, and more recently due to more households choosing renting over owning.

These vacancy rates are very high, but it does appear the rates have stopped climbing and - at least for rental vacancies - has started to decline. As starts decline (see Forecast: Housing Starts), inventory should stabilize and then decline, and the vacancy rates should slowly decline. More baby steps toward the eventual bottom.

Here’s the chart he provides showing the trend in vacancy rates:

Do I agree. Nope. As much as I respect Mr. Risk, I think he's guilty of either wishful thinking or a desire to be the first to call the bottom. Oh, he's definitely first. And about three years too early. I look at the statistics on the resets for adjustable-rate mortgages -- which really only start to spike next January and don't begin to subside until late 2008 -- and conclude that we're still in for about 18 months of bad road. Here's the chart, courtesy of InvestorsInsight (numbers are in billions). But what does everyone else think?

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