Every once in a while (about twice a day, or so) someone asks for my thoughts on the current housing market. I’m in the industry, I read everything I can get my hands on, and those who know me generally consider that I’ll give them the straight scoop, to the best of my abilities. It’s that little caveat ‘to the best of my abilities’ that keeps me up at night. I was reminded of this conundrum last week, as I happened to catch a snippet of ‘Mad Money‘, the CNBC financial show hosted by loudmouth Wall Street pundit and market observer, Jim Cramer.

As he blathered about WAMU, Wachovia, the general financial picture, and whom to buy, hold, and sell, it became apparent once again that even his views are in a constant state of flux. As we all have seen, the economy is an unfolding story- one that even a guy like Cramer, with all his access to the inside can’t keep up with. However, Cramer’s on the same page with guys like Warren Buffet’s housing expert, Ronald J. Peltier, when he said in last week’s show, “Buy a home in the next 6 months!” This is the bookend to his statement of November, 2007, in which he said, “Don’t you dare buy a home right now!” and implies he has revised his opinion, based on new information.

Here’s Jim’s quote, in response to a viewer’s question, “I thought you were of the opinion that banks could not bottom before housing bottomed. What changed?”. To which Jim says, “We saw quarters from Wells Fargo,(and) from USB.

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We saw a quarter from JPMorgan. We saw a quarter from Bank of America. And those guys had already put charges in that made it so that when
housing does bottom, they will be overreserved. That’s the ticket.
That’s what Wachovia did. They anticipated a housing bottom and they’re
going to be right.” The Federal Housing Authority will put $300 billion
to work to help homeowners with exotic loans and that will put a bottom
in housing. “I was the first guy that said torch your house for the
insurance money. I am now telling you that between now and the next six
months you have to buy a house.”

Interestingly enough, I am not surprised. Nor do I find his behavior indicative of an insidious desire to mislead. The reality of our current situation is far too complex to expect any one individual, board, committee, or administration to have all the answers at once- it’s been a roller coaster ride, with new developments dropping out of the sky on a nearly daily basis over the past 9 months. However, as with all things public and political- especially the economy, it’s easy to get pretty fired up, and develop an expectation that the ‘responsible others’ should have answers, and ‘do something’.
They should, they will, and they have- but that’s not the whole story.

It’s true, we have seen hundreds of financial institutions become victims of subprime mortgages, default rates have risen dramatically, and housing markets in some parts of the country have witnessed valuation declines up to 30 & 40% of their values 2 & 3 years ago. There is no way to minimize the impact of these activities on our national economy.

Regionally we’re seeing impacts, too: new home starts are down, housing inventory is up, time on market is averaging about 100 days, appreciation rates are flat, if not reversed, and savvy sellers are now happy to negotiate; the inverse of the blazing hot seller’s market we had just 2 years ago. Believe it or not, that’s the good news. Or at least it is if you’re a buyer- especially a first-time buyer- today.

Looking simply at the trendlines, and heeding the wisdom of some of history’s most well-regarded investors, it’s difficult to deny that housing has reached a low point. One which would have had those same investors on the line to their broker in a froth, screaming:”Buy, Buy!”

On that note, I’m going to break with my traditional reticence to make predictions; I’m going to go out on a limb here and say I believe that if we’re not at the bottom of the market, we are very close. If you heard about WAMU last week, or have been following their challenges, you know they are struggling to survive. They may, or they may not- that’s not for me to say. However, with the Fannie Mae/ Freddie Mac bailout, WAMU and Wachovia in a fight for their lives, and Congress finally making some decisions- I’m not going to take sides on whether they made the right ones- it’s my view that we have finally reached that critical turning point which every swing-pumping child recognizes must come: We are on the cusp of the apogee in our economic trajectory toward a brighter day.

This belief is partly in response to the numbers of investors we’re seeing come into the market, recognizing that windows of opportunity don’t stay open very long. The old ‘Buy Low, Sell High’ adage, being realized by those with the wherewithal to do so.

And of course, we’re in an election year- things are going to change: change being the only constant, we’re bound to see something different soon.

It’s also a function of my optimistic view of ‘the American Way’. Then again, maybe I just want to believe Jim Cramer- Call that pollyanna, call it wildly unrealistic- the reality is that nobody can contradict me today. They’ll be happy to criticize tomorrow, but that’s what critics do.