Housing | timiacono.com - Part 2

Housing/Internet Bubble 2.0

Maybe it’s just me, but I got a headache after listening to these two talk for just a couple of minutes about the San Francisco housing market- you’ve been warned…

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This story at The Nation about Baltimore’s economic ills that have led to this city being the country’s latest hotspot on police conduct and inequality points to a Pew Research poll from a couple of years ago that provides the following take on how vastly different household assets and debts are between blacks and whites in the U.S.

Note that these are averages, not medians, and the latter would show a much more accurate picture of the “typical” black or white American.

Nonetheless, the asset-to-debt ratios and the components of each offer compelling evidence of just how broad the economic/financial divide currently is between races.

A New Kind of Crazy in Canada Housing

There’s lots of crazy stuff going on in the world these days, both global finance and geopolitics-wise, but one of the crazier elements of the former has been the continuation of what, for many years, has appeared to be an unstoppable asset bubble (yes, that’s an oxymoron) in Canada’s housing market that, recently, appears to be veering toward a pin.

This chart of home prices from Vikram Mansharamani serves as a timely reminder of how nuts it’s been north of the border and how much potential currently exists for an unpleasant change in direction for that light violet curve.

Surging household credit, soaring home prices, tumbling oil prices, and now an admission by the Bank of Canada that they really don’t understand what’s been driving Canada’s housing market make this a situation that is just begging for a resolution of some sort.

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The Conference Board reported that consumer confidence reached a fresh seven-year high this month as Americans are increasingly optimistic about the economy in general and the job market in particular. The group’s confidence index rose from a downwardly revised 90.3 in July to a new recovery high of 92.4 this month as the present situation component jumped 6.7 points to 94.6. The expectations component dipped 1.0 point to 90.9.

Earlier, two reports indicated slowing momentum in the nation’s housing market as the Case Shiller Home Price Index showed declining year-over-year gains, down from 9.3 percent to 8.1 percent, and the FHFA reported price gains dropped from 5.5 percent to 5.1 percent.

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Housing Market Now Clearly Rolling Over

Via the latest data from Corelogic as detailed in this item at the Wall Street Journal economics blog come more reasons to think that the 2012-2014 surge in home prices has about run its course. Any investor (a key driver in the housing market rebound) looking at the graphic below probably isn’t thinking that now is the time to buy.

It seems the important question is whether they think now is the time to sell.

There are a growing number of anecdotal reports about investors and “accidental landlords” (those who rented out property in recent years rather than selling at a loss) who are cashing in. A good example is this Denver Post story where investors are said to be “selling like crazy”, all of which will make for an interesting conclusion to the summer.

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