Thursday, January 24, 2013

Housing Prices Starting to Melt Up

Ed Yardeni writes:
Home prices may be starting to melt up. That means that fewer homeowners will have negative equity in their homes and more of them will have less of it. [...] The median existing single-family home price rose 10.9% y/y during December, the best performance since January 2006. This is happening because the supply of existing homes available for sale dropped last month to the lowest since January 2001.

Well, it is partly because supply is shrinking, but mostly because of this guy:


  1. The entire market is b/s. Look at the number of cash buyers. Where I live it was 53% of all sales. That number gets even larger when you look at homes under the median price for that area. You have several large funds and PE groups picking up billions of dollars worth of homes with the intention of renting until they can dump them down the road when prices totally recover. As prices rise and financing starts to unfreeze, get ready for another housing meltdown redux, only this time its going to be very, very short lived.

  2. Will it result in a bubble or not? Will prices of all other things rise in tandem with the housing market to prevent a bubble? I've heard many times people claim that you can't re-inflate the same bubble that just burst. What say you?