Counterparties: A tentative housing recovery

By Ben Walsh
June 26, 2012

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to

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

More From Felix Salmon
Post Felix
The Piketty pessimist
The most expensive lottery ticket in the world
The problems of HFT, Joe Stiglitz edition
Private equity math, Nuveen edition
Five explanations for Greece’s bond yield
4 comments so far

Pension? I have never been covered by a defined benefit pension, and don’t know anyone who is. Do you? That’s so two generations ago.

Posted by Curmudgeon | Report as abusive

What about Social Sec, Curmudg? You and me might just be in the last wave to catch that train.

Sounds like these two guys should get together for coffee –

“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”

Sounds like this guy proves we’ve learned nothing from recent events – well, some haven’t -

“Stabilizing prices is immoral” – Interfluidity”

And some are “useful idiots”, to be disposed of when the heavy (revolutionary) work is done (save the tongue-clucking – that’s life, and he’s a wog full-grown) -

“New Normal
Modern London as an expensive, gated and foreign-owned skyscraper – Guardian”

Posted by MrRFox | Report as abusive

Is there a technical analyst in the house?

Looking at that Case-Shiller chart, do you see anything that says “turnaround coming”? I see an intact sequence of lower-highs and lower-lows. What happens next – isn’t it 50:50 still, at best?

Yes, there may be fundamental factors that suggest a reversal may be supportable, but nothing on the chart backs that up, does it?

Posted by MrRFox | Report as abusive

Point taken, MrRFox. I will likely get a few years before benefits have to be reduced due to lack of money.

Posted by Curmudgeon | Report as abusive
Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see