Bank of America – Bullish on Housing

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Bank of America isn’t buying the "blood bath" metaphor described by PIMCO in yesterday’s Bloomberg article. In fact, they’re downright bullish on housing. Bloomberg quotes Bank
of America Corp. Chief Executive Officer Kenneth Lewis on the housing market:

The worst U.S. housing slump in 16
years will begin to ease in the next month or two, and job growth
will lift home prices and spur construction early next year, Bank
of America Corp. Chief Executive Officer Kenneth Lewis said.

“The drag stops in the next few months,” Lewis said in an
interview yesterday in New York. “It’s just about to be over.
We’re seeing the worst of it.”

As you remember from my post yesterday about the dismal outlook of PIMCO investments and other housing bears they feel almost the exact opposite:

“The housing-market recession ain’t over,” McCulley said
yesterday at a Bloomberg News panel discussion in Beverly Hills,
California. “It’s going to be a long, protracted recession.”
Pimco, based in Newport Beach, California, runs the world’s
biggest bond fund.

And just to make things easy the Chief Economist from Countrywide, the nation’s largest mortgage lender chimed in with this analysis:

“Where do we stand now at this point in the correction?”
Eric Green, chief market economist at Countrywide Financial
Corp.’s securities unit, said at the Bloomberg panel discussion.
“It has not run its course completely. There is probably more
downside in terms of home prices.”

Three very smart people in very high places with completely different outlooks on the housing market. It’s no wonder the average American homeowner feels completely confused and bass ackwards when it comes to their personal housing situation.

My advice is plan for the worst while leaving yourself options for the upside. That means looking at medium length fixed loans, short or no prepay penalties (if you can afford it) and managing adjustable rate mortgage changes via a remortgage prior to the payment adjustment (and subsequent shock).

If you still feel confused feel free to email me about a personal game plan for you and your family.