The One Sentence Summary

Here’s Barry Ritholtz’s one sentence summary of the recovery in housing:

The present RRE situation can be best described as massive Fed stimulus + government induced foreclosure abatements = some stabilization.

which tallies pretty much with mine. Actually, I’d go a bit farther. The markets which have shown the greatest recovery recently, e.g. Miami, are doing so through cash sales to overseas buyers. That’s not a model that can be expanded to, say, San Bernardino.

The housing crisis is still a local problem with national implications and, if anything, the local conditions in a lot of the places with the most problems have gotten worse.

5 comments… add one
  • Sam Link

    Recovery in Phoenix seems pretty solid. I’m about to refi since I went from just under water to >20% equity in a year.

  • jan Link

    Phoenix, San Francisco, the westside of Los Angeles County are all showing signs of housing renewal But, these are only pockets of recovery, and there are many more places out there who simply don’t have the wealth or the industry around them to breathe competition and/or desirability into their areas.

  • …I went from just under water to >20% equity in a year.

    Seems legit…..

    Seriously, that kind of a change doesn’t make you wonder?

  • Ben Wolf Link

    I don’t think its a coincidence that credit has been expanding at an accelerating rate simultaneously with the housing figures. It looks to me like households are going out on a debt-spree again before they’ve fully deleveraged from the last one.

  • Sam Link

    Seriously, that kind of a change doesn’t make you wonder?

    1. no one has been building anything so supply is way down, even counting “shadow inventory” which represents about 2 weeks supply. Also, most people who stop paying at this point are looking to get the bank’s attention to short sell for a lateral move, rather than not being able to afford it – that’s not a net new house on the market.
    2. Part of that is paying a significant amount of principle, I think housing prices are more like 10%-16% year on year
    3. The rental market STILL has returns on the order of 6%+ with your house vacant 3 months a year and it getting trashed every 3 years. I won’t be surprised if prices keep going up until this settles around 3% (possibly with some volatility).

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