The trickle-down economic theory won't be at play when the recovery comes to the new home market, according to the weekly Housing Intelligence report from publisher Hanley Wood.
"When a true recovery finally arrives," the newsletter says, "it is likely to start at the bottom up."
Actually, there already is evidence that the low end of the new home sector is improving. Sales volume for the first six months of 2010 vs. the same period last year shows that sales of houses priced below $150,000 are up 5%. Also during that same time frame, sales are up 4% in the $150,000-$250,000 bracket and 1% in the $250,000-$350,000 segment.
Above $350,000, though, and sales are still sagging: down 7% in the $350,000-$500,000 bracket, off 11%, $500,000-$750,000, and down 13%, $750,000-$1 million.
Housing Intelligence also found further proof that "sales volumes tend to unfold from the bottom up" when it went back to look at what point along the cycle each price segment peaked. It found that low-end housing reached its zenith in 2005, a full two years before the higher priced brackets began to crater in August 2007, "well after the housing downturn had already begun."
