So, the recession is over because people are "snapping up" homes, as well all know. (I mean, I SNAPPED UP two myself! Didn't you?) According to mutual-fund-haver and sometime financial columnist Whitney Tilson, graphing the national Case-Shiller Home Price Index has recent trends that show "the start of the seasonal downturn that will take house prices down another 10%-15% by the middle of next year." (The Case-Shiller, which is basically a measure of the price that the same house is sold for over time, showed a long and then fast upturn from the late 90s to 2006, followed by a slight and then dramatic drop-off. Unsurprising!) But that just means more snapping-up, right? Oh and also maybe a new round of mortgages tipping underwater.
Thursday, October 29, 2009
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I understand how this is somewhat useful. But, as housing markets are very localized, taking overall home sales values does not give a great picture of anything. It's like how a trendline for life expectancy of EVERYONE doesn't tell anyone anything particular... except maybe how much their taxes are going to spike to help pay for the trending.
Greenspan was using housing value to replace income growth so that companies/shareholders could keep the money they might otherwise pay their workers and the consumer-drivien economy could still roar along based on debt based on housing values. A perfect set-up, really. Almost. More perfect would be to simply pay workers well enough so that they can buy your products. It's called Fordism and it worked for two generations in the US.
Making Greenspan is our generation's McNamara?
Well, I guess I'm happy the bank will be screwed when they take my house over next year.