Tuesday, May 29, 2012

Is the bottom really in?

Less than four months ago, I wrote The Housing Bottom is Here and I pointed out that the house price data had a significant lag so we had to look at other data for clues. The post title refers to the many emails I received back in February: "bold call", "gutsy call", "you are insane" ... and many more.
Read it at Calculated Risk
House Prices: From "bold call" to consensus in four months
by Bill McBride

There is good reason to think that a housing bottom is in and good reason to be cautious, too. Same with the economic recovery in general.

The good reason to be optimistic is that real indicators are looking better. The good reason to be pessimistic is that financial indicators are not looking better and in effect nothing has changed the pre-crisis behavior of the financial sector that led to the crisis.

Conclusion. We might squeak by with low growth until the next crisis hits. Since crises hit every five to seven years these days, we are already due. I would not be celebrating this apparent recovery yet.

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