Housing Crisis Unchanged: Not much has changed since February 2009

May 23, 2009

Have prices really dropped so much since February? Take a look at this Home Values History chart (courtesy of Case-Shiller) from just four months ago. The power of the chart lies in the message that it sends: Despite all the rhetoric of the last two months, prices are STILL too high, even after a 30% decline.

     

As we re-visit this original BusinessInsider.com article from just FOUR months ago, we have to ask the question: What have we seen in the housing market itself that would indicate that we are in the midst of a true recovery or bottom and not just a temporary remission from the housing crash? The answer is nothing. We’ve seen an extremely subjective psychological index (homebuilder confidence) rise from 14 to 16 (when anything below 50 is considered “poor”). This news broke only to be followed the next day by news that housing starts hit an all-time low in April. Objectively examine the big picture data. Look at the graph above. And look at the new mortgage reset graph from Credit Suisse that recently came out. When looking at the information in an unbiased manner, what do you discover?

I find that not a lot has really changed in the last four months - other than unemployment continuing to run up. No, we still have a ways to go. In fact, if the median housing value has increased in the last four months, I maintain that is ultimately a step in the WRONG direction, as we still have not had a full correction of housing prices back to 1999 prices.

No, the housing market will continue to correct. No matter how many billions Barney Frank, Obama or any other DC bureaucrat throws at it.