Counterparties: A tentative housing recovery

June 26, 2012

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It isn’t yet a full-fledged housing recovery, but it is good news of a certain kind: The Case-Schiller Index shows that average home prices increased 1.3% in April, after seven consecutive months of decline. April also showed the smallest year-over-year decline in home prices since September 2010:

What’s driving the tentative recovery? If you ask the National Association of Realtors, it’s partly because of shrinking home supply. Calculated Risk, who says it’s likely home prices have bottomed nationally, dismisses concerns about how backlogs of distressed homes may affect home prices:

Policy initiatives (refinance programs, emphasis on modifications, REO-to-rental and more) will lessen the downward pressure from distressed sales – and I also think any “overshoot” will be in real terms (inflation adjusted) as opposed to nominal terms. It is probably correct that any increase in house prices will lead to more inventory (sellers waiting for a “better market”), but that is an argument for why prices will not increase – as opposed to an argument for further price declines.

Binyamin Appelbaum wonders if an unusually warm winter could have influenced April’s numbers, as it influenced other economic indicators. Weather effect or no, April’s gains were also widespread, with 18 of 20 cities showing price improvement.

Mortgage lenders won’t like that Americans are more concerned about paying off car loans than home loans, though. Nor is it necessarily encouraging that when capital is needed for public housing, it comes not from state or local governments but from China. It’s also not good news, with credit hard to come by for many would-be home buyers, to hear of more difficulties at Freddie Mac. – Ben Walsh

Mitt Romney’s history as a hedge fund manager (of sorts) – Fortune
Congress may delay America’s impending fiscal catastrophe by a few months – Bloomberg

EU Mess
Martin Wolf: Spain ‘s biggest mistake wasn’t fiscal – it was joining the euro – FT
Greece’s new finance minister is nicknamed “Mr. Euro” – Reuters

“Stabilizing prices is immoral” – Interfluidity
We’re already in a “blindside recession” – John Hussman
Price stability, “happy shocks” and the problem with overabundance – Izabella Kaminska

Insert Fox News Joke Here
News Corp is considering splitting its news and entertainment businesses – WSJ

A helpful reminder that Treasury rates are falling as the federal debt is rising – Joe Weisenthal

Orbitz decides Mac users should see more expensive hotel listings – WSJ

Your pension is probably badly underfunded – WSJ
Actually September isn’t the worst month for financial crises – Post Libertarian

A new card that combines your credit cards into one – TechCrunch

New Normal
Modern London as an expensive, gated and foreign-owned skyscraper – Guardian
“Cities are living things, and the construction of the Shard is proof that London’s still very much alive” – Felix


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