Opinion

The Great Debate

Housing’s Humpty Dumpty moment

(James Saft is a Reuters columnist. The opinions expressed are his own)

All the King’s horses and all the King’s men have been busy propping up the housing market but sometime this year, perhaps soon, it will face a Humpty Dumpty moment.

While it gets a lot less attention than the banking bailout, the official forces targeted at supporting house prices are truly vast; a generous tax break for buyers and a mortgage market that has essentially been nationalized.

That’s bought a recovery of sorts — Standard & Poor’s/Case-Shiller home-price index released on Tuesday showed that in 20 major cities home prices rose 0.2 percent on a seasonally adjusted basis between October and November, despite a national unemployment rate of 10 percent and a slow-motion cascade of foreclosures.

But like the egg in the nursery rhyme, which once broken cannot be reassembled, housing still faces some pretty horrendous fundamentals. It needs a strong recovery in employment to arrive before political consensus for housing support cools. (Full disclosure: I just bought a house, but hey, everybody’s got to live somewhere).

Already there are signs that housing may be faltering. Existing home sales declined sharply in December, though this was partly because many rushed to close purchases before a now extended deadline for tax rebates expired on Dec. 1.

An emerging opportunity in U.S. housing

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

Deep breath. Ok, here goes: For the first time in a very long time U.S. housing might actually be a reasonable buy on a five-year view.

As a long-time housing bear and someone who believes there is still considerable pain to come in the U.S. economy and banking system that is quite a hard thing to say.

from Ask...:

Out with the old year, in with the new

Despite the incessant drumbeat of poor economic data -- consumer confidence fell to a record low in December and the price of single-family homes plunged in October -- the majority of Americans are optimistic about what is in store in 2009.

The Marist College canvassed 1,003 Americans about their expectations for 2009 on December 9 and 10 -- days after the National Bureau of Economic Research confirmed the United States had been mired in a recession since December 2007.

Expectations for a brighter future were higher among younger generations with 64 percent of those under 45 having an optimistic view compared with 52 percent for those 45 or older.

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