She’s expecting a double dip in housing prices NATIONALLY. Phoenix is ahead of the curve on home prices so I don’t expect a double dip in the median home price in the Phoenix area although I do expect prices to start falling again in some areas of metro Phoenix.

From Hussman Funds.

With regard to credit issues, some remarks by Meredith Whitney from a Bloomberg hedge fund conference last week are notable (if familiar):

“If you look at what happened last year, I would say a vast majority of the banking sector’s profits and capital creation was government induced. In the first quarter, it’s highly arguable that certain companies wrote up assets. People lowered their provisions on losses.

“What has kept home prices stable – and make note that politicians and banks are eating their own cooking because they really believe home prices are stable – they’re stable because there’s been a ton of inventory kept from the market. So if you control the supply, you can control the price without controlling the demand.

“Here’s a statistic that I find fascinating. This is just for the top four banks. If you look at nonperforming assets – that’s loans that haven’t paid over 120 days – the size of that is 1.5 times all of the chargeoffs that banks have incurred since 2005. So you think credit has stabilized, mortgages have stabilized? Non-performs have ballooned so they’ve more than doubled since the beginning of 2009, and that’s just stuff that has to start going on to the market, and interestingly, this quarter you’re starting to see housing supply reach the market. That to me triggers another down leg in housing, so to me, I’m steadfast in my belief that there’s going to be another double-dip in housing
“There’s huge growth in non-performing assets. These are numbers, apples-to-apples, on the four big banks. The issue is when does that stuff that’s not paying come to market, and when do banks recognize the chargeoffs? I think you’re going to see more of that in the second quarter and the third quarter. Does the supply move in the second quarter and then you report it in the third quarter? The timing may be weighted more to the third quarter. I just don’t know. I think you see a huge leg down in asset prices when you see the supply reach the market. So no, it’s not factored into valuations. No, it’s not factored into bank guidance. And yes, I think it’s going to be a big problem for the banks.”