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Housing Market Hype -- Are We Really Expected to Believe That Prices Will Rise with High Unemployment?

The "housing has hit bottom" talk is the biggest bunch of public relations BS since WMD.

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Oddly enough, the truth is available if you're willing to pick through the BS to uncover the nuggets. Here's an excerpt from an article in the Wall Street Journal that--just weeks ago--would have been dismissed these same claims as the ramblings of a Internet conspiracy theorist:

"Rising prices largely reflect a dwindling number of foreclosed homes being sold by banks and other lenders as well as stronger demand for those properties from investors. Foreclosures and other "distressed" homes typically sell at larger discounts, and with fewer of those properties selling, prices are under less pressure.

But rising demand, especially at the low end, is putting upward pressure on prices as traditional buyers—as opposed to investors—feel more confident about jumping into the market." ("Housing Market Displays New Vigor as Prices Rise", WSJ)

The article doesn't say that there's a shortage of these "distressed" homes, (which there isn't) just that the banks are not putting them up for sale. And that's what's behind the "rising prices".

Bottom line: Housing is going nowhere fast. All the hype will amount to nothing. The market is going to be stuck in a long-term funk until more people can find work, wages increase, student loan debt is whittled down, and prices fall. Of course, none of these are on the near-term horizon, so demand will remain weak.

 

Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion(AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

 
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