Look at the headlines today: American home prices have hit rock bottom:
US cities see house prices drop by 2.8% in January (FT);
Woningprijzen VS dalen nog in recordtempo (Vastgoedmarkt; in Dutch);
When home prices hit bottom (CNN);
Record drop in home price index (CNN);
As it was announced today that the S&P Case-Shiller 20-city index fell in January by 2.8% m-o-m and 19% y-o-y. All twenty cities were down, with Dallas being the least affected. So, the top three, from 3 up:
3: San Fransisco (-32.4%)
2: Las Vegas (-32.5%)
And the winner of the Case-Shiller award for poorest performing metro area in the US is ….
1: Phoenix, Arizona (-35%)
Well, I’ve been in Phoenix once. Didn’t like it too much, though. What I recall is a seemingly endless, straight road leading to a seemingly endless citygrid in the middle of the desert. US residential markets are not my particular area of expertise, but I can understand that when you have a complete desert to build in, and that is what you will do during market upturns, you may end up with a serious oversupply further down the road. And when prices drop in such a scenario, they drop fast. The Phoenix situation more or less resembles the situation in the US as a whole. A seemingly endless natural resource of land and a seemingly endles resource of wealth play a silly chicken game of supply and demand. This goes well, very well, untill one of the two passes. So, wealth passes. Demand drops. The market deflates. And you are left where you started off before this chicken game started. Only with a few more homes to live in… From boom to bust in just a couple of months. Game over.
Did anyone notice that? Phoenix?
A phoenix is a mythical bird . It has a 500 to 1,000 year life-cycle, near the end of which it builds itself a nest of myrrh twigs that then ignites; both nest and bird burn fiercely and are reduced to ashes, from which a new, young phoenix or phoenix egg arises, reborn anew to live again. The new phoenix is destined to live as long as its old self.  The bird was also said to regenerate when hurt or wounded by a foe. source: wikipedia
Need I say more? Lets see about the regenerating power of the US housing market.
(anyone interested in the history of this market from 1890 – 2007, take a ride here).