The Housing Market Recovery Has Vanished
August 9th, 2011
Any glimmer of hope that the housing market will stage a recovery in the upcoming months has vanished, thanks to the recent spate of bad economic news that has been making headlines over the past several weeks.
According to the latest analysis of home price trends in 384 markets based on the Fiserv/Case-Shiller Indexes, it will be well into the first quarter of 2013 before median home prices across the nation will even be on par with prices from the first quarter of this year.
“Every piece of bad news causes more people to be more nervous,” said David Stiff, chief economist for Fiserv, which provides information management and analyses data for the financial services industry. “The stabilization of housing markets depends greatly on household confidence in the strength of the economic recovery. Unfortunately, recent economic news has done little to build confidence.”
There still, however, is no shortage of housing inventory. More than 3.75 million existing homes in June alone were on the market, according to the National Association of Realtors. At the latest rate of sales, it would take 9.5 months to exhaust that inventory, about 50% longer than what NAR considers a healthy housing market.
“I don’t think we’ll see an increase in sales until we see the economy improving,” said Fiserv’s Stiff.
CNN et. al. would have us believe that the housing (and economic) recovery have stalled because of a “recent spate of bad economic news.” The fact is, however, that the economic news has been bad for over three years – and that trend will not only continue, but accelerate.
Housing will not reach recovery until the economy improves, and that means we’re looking at about five to ten years at best. Yes, our view is contrary to mainstream analysis, but we have to remember that we not only never came out of the 2008/2009 recession, we’re actually in Depression territory, which means we’re looking at not months, but years, potentially decades. In November of 2009 we wrote: