Finance Column » Your Money This Week » Housing market springs forward

Housing market springs forward

By Mark Hamrick ·
Tuesday, March 26, 2013
Posted 12 pm ET

Tiger Woods is again the world's No. 1 golfer. The stock market's key indexes are at or near record highs. Spring is here, at least in terms of the calendar. One might want to believe that all the negative things that happened over the past half-decade or so, never really took place. And as we speak, the biggest problem facing global financial markets is ... Cyprus? We still need some time to see how that works out.

And then there's the housing market. Some folks would have you think that it's 2006 all over again, the way home prices have been rising in parts of the country.

But economists and even the data argue that we've not gotten back all that was lost when the housing market was soaring. It is always particularly impressive when economists and data are actually pointing in the same direction. Of course, they could be leading us astray, but let's assume not, just for the sake of argument.

Just today, one major metro newspaper headline posed the question whether there's a housing bubble again.

Remember the bubble?

And remember when home prices were soaring and everyone seemed to be leaving their job to become a real estate agent? It got to be a running joke with my business journalist colleagues that one industry official we interviewed about the housing market almost always used the line, "There's never been a better time to buy a home." Turns out, it really wasn't such a good time to buy after all.

I remember one day that a woman who used to live near us just started rambling almost uncontrollably about how much her house had become worth and how happy she was about it. The last time I'd seen something like that was when a relative was calling my wife at night saying Intel was a "screaming buy at 75." Never mind that we weren't really "single stock people." Fortunately, she didn't get caught up in that frenzy. That boom didn't end well either.

And then the housing-market-and-taking-down-everything-else-with-it crash happened. It got so bad that I knew several people who left their jobs as real estate agents to go back to work as ... gulp ... journalists. As we say, the next step after that is selling apples (lower case, not the computers or phones) on the street.

A long way to go

We've come a long way from the depths of the financial crisis, but we aren't nearly all of the way back yet either. I'd offer a couple of factoids to back this up.

  • For one, the Standard & Poor's/Case-Shiller home-price index says, from the peak of the summer of 2006 through January 2013, we're still down about 30 percent.
  • And a quick update from the National Association of Realtors finds that the trade group now has about 1 million members, down from nearly 1.4 million real estate agents during the peak of the market, again in 2006.

Forward guidance? I believe when your neighbor or relative starts rambling hysterically about how much their home or stock portfolio is worth, that's about as strong a "sell" signal as you can get.

Another measure of the still-recovering market is the relatively small number of people who are in the game these days.

As veteran economist Bob Brusca put it when I asked him about the housing market, "Look! Up in the sky! It's a bird! It's a plane! No! It's the credit rating you need to qualify for a mortgage!"

Follow me on Twitter @hamrickisms.

And what do you think? Has the housing market recovered?

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