Housing Prices to Rise 3-5% This Year: John Paulson - CNBC
Housing Prices to Rise 3-5% This Year: John Paulson
Published: Monday, 10 May 2010 | 12:17 PM ETBy: Reported by Maneet Ahuja, written by Michelle Lodge
John Paulson, the hedge-fund manager who made $15 billion shorting the real estate market, said Monday that he expects housing prices to rise between 3 and 5 percent this year and another 8 to 12 percent in 2011.
Paulson, who made his comments in a conference call with investors, said home ownership is the most affordable it has been in 50 years. He said residential real estate is 60 percent more affordable than it was at the peak of the housing bubble.
Paulson added that his firm closely tracks home prices in California; he believes they are the most important indicator what the rest of the country's housing markets will experience six months from now.
Commentary:
St Louis readers may or may not immediately recognize the fact that this analysis was released by the firm and analyst that made Billions shorting the housing market prior to the downturn. As such it is likely to get lots of attention in the press and make headlines today, however, we expect that this California centric article will prove to be somewhat irrelevant for the midwest and the St Louis housing market in particular.
Real estate markets are local and while California is well off (more than 50%) from peak pricing, the Saint Louis real estate market is only off 10-12%, and we will reiterate our position that the market will not show positive pricing appreciation until a definitive change in unemployment occurs. The St Louis real estate market tends to lag the coasts (including California) not only by about 6-9 months in market shifts but also in the depths of valleys and size of rises.
In reviewing local conditions for the St Louis housing market, we expect that the inventory levels (which were drawn down below 5 months until $175K) will return to 6-6.5mos and the market will in fact moderate this year, ending up in terms of transactions in 2010 vs. 2009.
Stay tuned for future posts on specific market conditions locally for the Saint Louis Housing market.
