The so-called housing bubble was not something we paid a whole lot of attention to here at Abnormal Returns. For continuing coverage of the issues surrounding residential housing we recommend The Housing Bubble blog. However today we came across a handful of posts that touched on housing.

Motoko Rich in the New York Times reports on the deflation of the condominium craze. In short, “The Great Condo Gold Rush is fading from memory and the Great Sell-Off has begun.” Many of those condo speculators are now pressuring the market, but:

Still, a sell-off in speculative condos is unlikely to start a widespread housing crash, because condos were more overbuilt than single-family homes during the recent boom, said Joseph Gyourko, professor of real estate and finance at the Wharton School of the University of Pennsylvania. But weakness in the condo market, he said, “is a consistent indicator that the great boom has really ended.”

Howard R. Gold in Barron’s never thought there ever was a nationwide housing bubble, therefore does not think there will not be a nationwide housing bust. According to some analysts we are entering a crucial period for the housing market where rising inventories begin to put pressure on resale prices. The question is whether it is a trickle or a torrent.

The question is whether any of this actionable in terms of housing stocks. According to Mark Hulbert at there is no consensus among newsletter writers on the prospects for housing stocks. On one hand:

Seiver recently wrote: “The end of the housing boom is now obvious to almost everyone … but we do not believe that the downtrend in housing stocks is over yet. The air will continue to come out of the housing bubble ever so slowly, and all through 2006. It will take years to unwind the overinvestment and overspeculation in housing.”

On the other hand the housing stock complex already has corrected a significant part of its up move,

Buckingham acknowledges the recent bad news in the housing market. But he notes that, notwithstanding that bad news, some of the housing companies are not only projecting no decline in their earnings for 2006 but actually some modest earnings growth. So it’s not a bad bet that their stock prices will rise.

From Buckingham’s point of view, therefore, the major effect of all the bad news in the housing market is to render the housing stocks great bargains, since some of them are down 50% from their 52-week highs. In essence, these stocks represent an opportunity to buy very profitable companies that are out of favor.

It is likely that the housing stock complex will remain a battleground for some time. It will be interesting to see if the stocks can shrug off the coming flood of media stories on the weakening housing market and stabilize. Let’s keep an eye out for a slew of magazine covers.