LIZ ANN SONDERS: We May Have Seen The 'Rock Bottom' In Housing

Liz Ann Sonders

The housing market may have hit “rock bottom,” Charles Schwab’s Liz Ann Sonders says in a new report on the industry this week.

Sonders, chief investment strategist at the firm, sees two big themes for the coming year: 1) a reversion to local market movements versus national market movements and 2) the preference to rent versus buy.

In her report, she sees further downside risk to prices. But she remains optimistic. Most metrics used to guage the markets are pointing to an upturn, she says.

The NAHB housing index is nearing pre-Lehman collapse highs, following four consecutive months of increases.

Existing homes sales have rebounded off of 2010 lows, while new home sales have leveled off.

Add to that, pending home sales are finally accelerating.

Construction on single-family homes appears to finally have hit a bottom, as permits increase from 2009 lows.

For multi-family units, the rebound has been much sharper with a V-shape recovery.

Renting has once again surpassed buying, which will mean steadily increased renting costs. Those dynamics could push the pendulum back to buying.

Home ownership rates have fallen substantially, but that's not a bad thing. It erases gains made through dangerous lending practices and reverts the market back to older norms.

Visible home inventory is also showing a retreat, although the shadow market could reverse that when banks begin foreclosure processes again.

Record low mortgage rates, which dropped below 4%, are making it easier for Americans to afford a new home if they're in the market.

However, it's not always such a bright picture. The real 30-year fixed mortgage rate could be lower.

Also, home prices remain weak, but may benefit from macroeconomic tailwinds.

Existing homes now sell for a near 25% discount, on average, to new constructs. But this should mean revert as excess supply recedes and foreclosed homes get moved through the pipeline.

TO RENT OR BUY: A Quick Price Guide To America's 20 Hottest Real Estate Markets

Now that you know what the housing market looks like,
Click here to see whether you should rent or buy a home >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at