In an interesting twist, we have the following headline from Bloomberg news:
Home Prices in 20 U.S. Cities Mark First Gain Since 2010
So, was I dreaming when they wrote
But, apparently, there is, so here is the 20-city composite, seasonally adjusted:
No, your eyes are not fooling you.
The June 2012 value of the index is almost up to the February 2011 level. Amazing! Stop the presses.
What is clear to anyone looking is that the index has been stuck under 150 since December 2008, regardless of TARP, the Stimulus, and a whole host of measures enacted to keep people in properties they have not paid for.
Of course, when the index moves up by a point or two, we hear the news of the great housing market recovery that's just about to start.
Methinks such news of the re-birth of a vibrant housing sector are premature.
If you look beyond the oscillatory pattern in non-seasonally adjusted data, you'll see that actual transactions have been flat since President Obama took office. And, that's what matters here in terms of signaling the comeback.
Now, ask yourself how you'll feel about the following when the housing market finally does get going again:
Mr. Jones obtains a $500,000, no money down, interest only mortgage to buy a nice house and fill it with state of the art appliances. Pretty soon, the bubble bursts. Mr. Jones keeps making most of his interest only payments, while politicians renegotiate his mortgage on his behalf, cut down the principal to current market value of the property at $350,000, re-arrange the payment schedule etc. Housing market picks up. Mr Jones sells the property for $450,000, pockets the extra $100,000, after all these years of basically having paid a monthly rent while calling himself a homeowner.
Is that "fair"?
NB: I know, the stories are referring to the quarterly national index values (COMPOSITE-US-SA). The shape is similar with that index as well: