Bank of America and Credit Suisse have a bearish outlook for the housing market. In a recent report, Bank of America concluded that home prices are overvalued.
Home prices appreciating faster than disposable income per capita fueled Bank of America's conclusion. The solution may come, the report reads, in one of two ways: slower home price growth, or home price decline, The Houston Chronicle reports. Additionally, Credit Suisse recently downgraded the stocks of home builders KB Home, Lennar, and Meritage. Lennar and Meritage were downgraded from overperforming to neutral, while KB Home was downgraded from neutral to underperforming.
In addition, the two banks predicted a slowdown in other housing-related expenditures. "A slower pace of turnover of the housing stock, as implied by the weaker trajectory for home sales, means a somewhat dimmer outlook for renovation spending, furniture sales and other housing-related expenditures," the BoA Merrill Lynch Global Research Report said.
