It's Not All Bad. Right.

"In a faint hint of hope for the country’s struggling housing market, home prices did not fall as fast in April as they did in previous months..." [click here to see the whole article.] Wow, doesn't that sound great! A "faint hint"; that sounds more like the Cub's chances to win the World Series. That's how the New York Times described the latest data from Case-Schiller.

Years ago I worked with a researcher, Rhea, who had a tendency towards negativity, usually about one of my ideas. Once she said something very astute (actually, I attribute a lot of smart things to her; this one I remember). When asked why she said "No" more than "Yes" her reply was, "When I say 'No' or 'It won't work', I'm right more often than I'm wrong." Back then we were talking about consumer behavior and advertising; today I think her insight is more appropriate than ever before.


This morning Case-Schiller reported the first positive news for real estate in many months (house price declines were slower than in previous months.) The majority of markets the consultants track showed positive trends last month. But the recovery of the housing market still seems way off. As a society, we may have managed a correction in the behaviors that led us to our current state. Home prices have come down, the Fed is managing interest rates downward, the stock market is up 20% this year...it all sounds good. Better, many real estate agents are touting a renewed and vigorous level of activity in sales!

Yet unemployment is still high (9%+), our personal debt levels are high and credit standards are more traditionally rigorous. I see more foreclosures and I've been involved in three short sales in the last 45 days. I'm sorry, I just don't see where the optimism deserves a place.

A friend once described me as being "disgustingly enthusiastic". I try to find the silver lining in every situation. But today, thinking about the optimism in the real estate market, I am more aligned with Rhea and have to say, "I don't think so."

I hope I'm wrong.

DS