We’re not there yet. The new Case Shiller is out with – gasp! – more declines. We keep an eye on the sentiment in news articles rather than what the articles actually say.
The only sign the housing free fall is being acknowledged is that there is no quote from the NAR in this piece.
Plus, in many of the free-falling cities the majority of real estate sales consist of distressed properties such as foreclosed homes and short sales. These houses tend to sell at a steep discount to the rest of the market, and when they account for a large proportion of all sales, they can exaggerate the depth of price declines.
This argument has to die before we see a bottom. Properties that sell are the market. Property owners with above market prices aren’t selling. No one cares how much the granite counter tops cost now.
Nicholas Retsinas, Director of Harvard University’s Joint Center for Housing Studies, agrees. “Housing problems are at the core of our economic problems,” he said, “yet, of the government interventions made during 2008, few were focused on housing.”
Retsinas has some cojones to be appearing in public. Here he is from an article in September 2006 on the Harvard website:
“HOUSING BUST AHEAD.” The headline hints of catastrophe: a dot-com repeat, a bubble bursting, an economic apocalypse. Cassandra, though, can stop wailing: the expected price corrections mark a slowing in the rate of increase — not a precipitous decline. This will not spark a chain reaction that will devastate home owners, builders, and communities. Contradicting another gloomy seer, Chicken Little, the sky is not falling.
The rest of the article is well worth reading. Retsinas ridicules the idea that housing prices will fall or that there will be any economic dislocation. He also lauds the innovation of homes being used as ATM machines!
