Housing Recovery Is All Hype (Shock!)
In this corner, Richard Lee, a Las Vegas homebuilder quoted in The New York Times. He thinks a new housing boom is coming. "We're going to come back like you've never seen us before," he says.
And in this corner, Mike "Mish" Shedlock, a commentator who says talk of a "second boom" housing recovery is just hype. Millions of empty, existing homes for sale will "keep a lid on resale prices for a long time to come, possibly a decade."
The U.S. housing market is slowly recovering from its worst crash in many decades. Recovery takes time, but there are a growing number of signs that the housing market is becoming less chaotic as the months pass.
For example, housing developers are becoming less depressed as they see increases in home sales, in interest from potential homebuyers, and in their prospects for the future. That comes according to the latest National Association of Home Builders/Wells Fargo Housing Market Index, a poll of housing developers that charts their feelings about the housing markets.
The journalists at Reuters responded to that Index with the headline : "Homebuilder confidence at 2-1/2 year high in May." However, "confidence" seems like the wrong word to describe the latest index, considering it only rose three points to reach a score of 22. Anything less than 50 on the 100-point Index counts as "poor" or "not very confident."
Shedlock used the latest index to prove his conclusion that the bad times for housing are just beginning -- and might last for 10 years. That also seems like a stretch. The index's numbers might be low, but it still shows improvement.
Shedlock also points to The New York Times story on Las Vegas. Though a close reading of that story also reveals a more complicated picture.
Yes, the piece quotes home builders like Richard Lee saying ridiculous things. However, there is also evidence in the article that foreclosed homes are selling quickly in Las Vegas -- so quickly that potential home-buyers interviewed for the story gave up trying to buy a foreclosed home after they were outbid one too many times.
Las Vegas is a complicated market with serious problems. But with prices already down so deep, it's hard to argue with this evidence that the worst is yet to come -- for Vegas or for the rest of the country.