Counterparties: A tentative housing recovery
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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
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