This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Housing Market Just Hit Bottom: Bank of America Merrill

NEW YORK ( TheStreet) -- Housing prices are bottoming now, though the recovery "will not begin in earnest until 2014," according to a Bank of America Merrill Lynch report released Thursday.

Merrill Lynch analysts had forecast in a November report that housing prices would drop another 8% from the second quarter of 2011 through the first quarter of 2013. However, the monthly supply of houses has declined and the number of "distressed" sales have lower than forecast.

"We expect moderate increases in these parameters over the next two years, but due to ongoing foreclosure prevention efforts, we think the levels will be lower than we previously believed," the report states.

Despite the earlier bottom, Merrill analysts are hardly more bullish on the recovery.

"Along with the earlier bottom is a slower recovery, and hence a flatter profile. We still believe prices should accelerate in the later years once the majority of the foreclosure inventory is absorbed, allowing prices to snap back to the trend in income. From 2012 through 2020, we look for cumulative price growth of 42%, which is comparable to our prior forecast," the report states.

Merrill's report touches on several policy initiatives aimed at restarting the housing engine, including the settlement between 49 state attorneys general and the five largest mortgage servicers: JPMorgan Chase (JPM) Bank of America (BAC - Get Report) Wells Fargo (WFC) Citigroup (C) and Ally Financial, but argues the initiatives do not offer a "silver bullet," to turn the market around.

Among other things, a housing recovery would bode well for shares those same big banks, which have rallied strongly in 2012. Leading the way has been Bank of America itself, which has the greatest exposure to the housing bust and its fallout.

Bank of America shares are up nearly 77% year to date after a dismal 2011, but were lower in premarket trading Thursday.

The bottom call by Merrill's analysts echoes one by Barron's, which argued on its front page Saturday that the housing price decline is in its final throes.

Citing data from CoreLogic, the magazine attaches great significance to the fact that nondistressed-sales prices rose 0.2% month over month in December 2011 and 0.7% in January 2012.

-- Written by Dan Freed in New York.

Follow me on Twitter

Readers Also Like:

>> Cramer: One Shining Moment for U.S.A.

>> 8 Movie Moguls' Stocks That Should Get Top Billing

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.05 0.00%
AAPL $93.24 0.00%
FB $117.81 0.00%
GOOG $701.43 0.00%
TSLA $211.53 0.00%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs