But back to the mundane matter of the housing market. As per the National Association of Realtors' report yesterday, existing home sales plunged 9.6% (annualized) in February and the number was substantially below the Wall Street-Einstein consensus estimate. Prices declined 5.2% to their lowest level in nearly nine years. That's a big price drop and, contrary to the views of the rather pedestrian mainstream analysts, lower prices are not stimulating sales. Here is yesterday's report from Bloomberg news: LINK
Today the Federal Housing Finance Authority reported a .3% price decline for January, BUT revised December's previously reported .3% to a 1% decline. Here is that report: LINK Don't forget that is Government reported data, so the pig has probably been dressed up manipulatively with rose-colored lipstick.
Although real estate professionals and Wall Street will figure out a way to spin this data in a positive manner, the housing market still has a long to way to fall in order to correct from the massive bubble inflated by Greenspan and the related lending fraud enabled by the system. While Govt/industry inventory shows relatively flat growth projections, the shadow inventory of foreclosures, impending foreclosures, unreported bank REO and potential existing homeowners who would like to sell but want to "wait for the market to come back a bit" has created a massive glut of inventory (and potential inventory) that it is going take substantially lower prices and a much stronger economy in order to restore supply/demand stability. Of course, the Government and Wall Street would like you to believe that the shadow inventory is not really there, just like the Constitution...
I have been saying for quite some time that I expect to see prices decline to at least the average price levels from the early 1990's, before Greenspan's money printing mechanisms spawned successive asset bubbles and subsequent busts.
Here's two interesting graphs which show why I believe our economy is doomed - and therefore housing prices will continue to collapse - and why people are crazy to not move as much of their wealth as possible into gold and silver and out of dollar-based "assets," especially housing. The first graph shows the Fed policy being implemented to try and prop up the economy/housing (you can enlarge the charts by clicking on them):