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House Price Recovery Just A Head Fake, Says Alpert, Especially In New York

Posted Jan 28, 2010 02:15pm EST by Peter Gorenstein in Recession, Housing
Related: xhb, len, tol, kbh

In the second half of 2009, house prices staged a surprising recovery, leading many to conclude that the housing bust was done.

Keep dreaming, says Dan Alpert of Westwood Capital.

The rise in the second half of 2009 was mainly the result of pent-up demand combined with a tax-break, subsidized mortgage rates, and other incentives.  The housing market is still awash in excess inventory, and Alpert says this will eventually drive prices down to 8%-10% below the lows of early last year.

The good news?

House prices should bottom this year and then begin to recover.  Also, for the hardest hit areas, such as those in California or the sand states, the bust is probably over.  Prices have fallen so far in those areas that Alpert thinks they're bottoming now.

So where is the sky still falling?

Places where price-to-rent ratios are still well above historical norms, such as New York City.

A staggering amount of excess inventory means the housing crash in NYC is alive and well, Alpert says.

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